When comparing different bonds, for example corporate bonds and Treasuries, should we use total return or Option Adjusted Spread if we want to know one's return advantage over another?

Some say total return isn't a good candidate since it reflects yield level change, and corporate bond indices usually have longer duration. OAS or duration-adjusted excess return is therefore a better measure. I don't quite understand why this makes total return a bad choice.

Can anyone please shed some lights?


Your Answer

By clicking "Post Your Answer", you acknowledge that you have read our updated terms of service, privacy policy and cookie policy, and that your continued use of the website is subject to these policies.

Browse other questions tagged or ask your own question.