In the schweser book, they first define spread risk as the risk of of mortage security’s yield over the T-bond widening.
Then when discussing the actions a manager should do when he doesn;t hedge the spread risk they said if there is an increase in the spread , the manager should increase the exposure to mortgage securities?
Don’t these two statements contradict each other?
I thought increase in spread, means decrease in the price of the security and therefore the manager should try to underweight the security.
I would appreciate if anyone can clarify this please!