{"id":47178,"date":"2019-08-05T10:12:20","date_gmt":"2019-08-05T14:12:20","guid":{"rendered":"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/"},"modified":"2024-04-23T13:39:05","modified_gmt":"2024-04-23T17:39:05","slug":"total-return-swaps-101","status":"publish","type":[3762],"link":"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/","title":{"rendered":"Total Return Swaps 101"},"content":{"rendered":"<div  class=\"bbg-row-container\">\n    <style>section[data-anchor=row-69fcc02339431]::before {\n\t\t\t\tbackground-color: #eeeeee;\n\t\t\t}<\/style>\n    <section class=\"bbg-row bg--custom-color  bg--eeeeee text--black bbg-row--full-bg-bleed\" data-anchor='row-69fcc02339431'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8 bbg-column--valign-bottom\"\n    style=\"\"\n    >\n    <p>    <ul class=\"bbg-categories_list\">\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/markets\/\" rel=\"category tag\">\n                    Markets\n                <\/a>\n            <\/li>\n                    <li>\n                <a href=\"https:\/\/www.bloomberg.com\/professional\/insights\/category\/trading\/\" rel=\"category tag\">\n                    Trading\n                <\/a>\n            <\/li>\n            <\/ul>\n<div\n    class=\"bbg-spacer\"\n        style=\"height: 24px !important\"\n    >\n<\/div>    <h1 class=\"bbg-metadata bbg-metadata--title\">Total Return Swaps 101<\/h1>\n<\/p>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black row-padding--top-compact row-padding--bottom-none bbg-row--full-bg-bleed\" data-anchor='row-69fcc0233ee6a'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <p><div\n    class=\"bbg-spacer\"\n        style=\"height: 40px !important\"\n    >\n<\/div>    <p class=\"bbg-metadata bbg-metadata--date\">August 5, 2019<\/p>\n<\/p>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--black bbg-row--full-bg-bleed\" data-anchor='row-69fcc023405df'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <p><div\n    class=\"bbg-column bbg-column--width-2\"\n    style=\"\"\n    >\n    \n<\/div><div\n    class=\"bbg-column bbg-column--width-8\"\n    style=\"\"\n    >\n    <p><div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>Total Return Swaps (TRS) are swap contracts where one counterparty pays\/receives the total return of an asset to\/from another counterparty, versus receiving\/paying a \u201cfinancing\u201d rate. <a href=\"https:\/\/www.bloomberg.com\/professional\/blog\/hedging-managing-credit-portfolios-total-return-swaps\/\">Bond Index Total Return Swaps are especially gaining traction<\/a> with bond and credit portfolio managers as an effective tool for hedging and adding risk rapidly to generate alpha.<\/p>\n\n<\/div>\n<div id=\"\" class=\"wpb_content_element bbg-single-image align-center\">\n    <figure class=\"bbg-single-image__figure\" style=\"max-width:1024px\">\n                <img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"201\" src=\"https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/10\/2ETS-_-BTRS-Blog-Series-_-graphic.jpg\" class=\"bbg-single-image__image attachment-large\" alt=\"\" title=\"2ETS-_-BTRS-Blog-Series-_-graphic\" \/>\n        \n            <\/figure>\n<\/div>\n\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p>With swap contracts, the Financing Rate is effectively meant to compensate the index payer for enabling the index receiver to not tie up funds in a physical bond or loan (typically set to LIBOR in the relevant currency). The Index Receiver always pays the Financing Rate to the Index Payer.<\/p>\n<p>The Index Total Return is the percentage change in value of the reference index from when the contract was entered to when the contract was exited, by either trading out of the contract or waiting until the swap maturity date.<\/p>\n<p>If the Index Total Return is positive, then the Index Payer makes a payment to the Index Receiver. If the Index Total Return is negative, then the Index Receiver makes a payment to the Index Payer.<\/p>\n\n<\/div>\n<div class=\"bbg-interstitial\" aria-label=\"interstitial\" tabindex=\"0\">\n\t<style>\n\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\tbackground:rgba(0,0,0,0);\n\t\t\tpadding: 104px;\n\t\t\t\n\t\t\t\n\t\t}\n\t\t.bbg-interstitial #card_1.bbg-card_hasCta .bbg-card__content, .bbg-interstitial #card_1.bbg-card_hasCta .bbg-card__content p{\n\t\t\tcolor:inherit;\n\t\t}\n\t\t@media (max-width: 768px) {\n\t\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 32px;\n\t\t\t}\n\t\t}\n\t\t@media (max-width: 480px) {\n\t\t\t.bbg-interstitial #card_1.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 18px;\n\t\t\t}\n\t\t}\n\t<\/style>\n\t<div class=\"wpb_content_element bbg-card  bbg-card-dark bbg-card_hasCta has_interstitial\" id=\"card_1\" data-card_type=\"no_image\">\n  \n  \n  <div class=\"bbg-card__innerwrapper\">\n    <div class=\"bbg-card__content\">\n      \n      \n                      <h3 class=\"bbg-card__title\">Discover more with Bloomberg newsletters<\/h3>\n      \n              <div class=\"bbg-card__wysiwyg bb-wysiwyg\"><p>Subscribe now<\/p>\n<\/div>\n          <\/div>\n\n          \n<div\n  id=\"cta_679040926314372858\"\n  class=\"wpb_content_element bbg-cta icon icon-arrow\">\n  <style>\n    \n    \n    \n  <\/style>\n  <div\n    class=\"bbg-cta-link link-holder\"\n    data-links-type=\"cta-links\">\n    <p class=\"bbg-cta-p right\">\n      <a\n        class=\"bbg-cta-link link interstitial_cta\"\n        href=\"https:\/\/www.bloomberg.com\/professional\/insights\/newsletter\/\"\n        target=\"_blank\"\n        rel=\"\"\n        data-section-name=\"\"\n                role=\"button\"\n        aria-label=\"Learn more\"\n        >\n                <\/a>\n    <\/p>\n  <\/div>\n<\/div>\n\n      <\/div>\n\n  <\/div>\n\n<\/div>\n<div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<p><strong>Standardization<\/strong><\/p>\n<p>TRS contracts are customizable. They can reference any index and have maturities and payment dates that match a company\u2019s specific needs. Liquidity, however, is becoming concentrated in the most relevant indices with standard terms. This standardization is occurring in the following ways:<\/p>\n<ul>\n<li>Only a small subset of all bond indices is being referenced in contracts. Contracts referencing the most relevant benchmark indices are attracting the most interest. These benchmarks where liquidity is best include aggregate, high yield, emerging markets, leveraged loan and investment grade.<\/li>\n<li>Indices that are well-supported in terms of their construction and daily valuations are also critical to the success of a TRS contract. The better the underlying index is maintained and priced, the less risk that the index itself might not perform in line with the market it represents.<\/li>\n<li>The maturity and payment frequency and Financing Rate are also being standardized.<\/li>\n<li>As more contracts are traded with the same terms, liquidity improves for managers who do not want to hold the contract until the scheduled swap maturity date.<\/li>\n<li><a href=\"https:\/\/www.bloomberg.com\/professional\/product\/indices\/bloomberg-total-return-swaps-btrs\/\">Bloomberg Total Return Swaps (BTRS)<\/a> offer further standardization in contract terms. Additional contract term standardization makes it easier for investors to efficiently manager their risk and counterparty exposure as BTRS contracts are more fungible than standard TRS contracts. A full suite of analytics and trading tools, such as straight through processing (STP), including automatic VCON generation has been implemented by Bloomberg, making the mechanics of trading and managing risk easier.<\/li>\n<\/ul>\n<p><strong>The Index Total Return<\/strong><\/p>\n<p>When a trade is entered into, the buyer and seller agree to an initial index value. This traded index value will be linked to the index value, but will deviate based on supply and demand amongs other factors. The Financing Rate is also set. Depending on the contract entered into, there may be an initial exchange of cash and initial margins.<\/p>\n<p>If a contract is held to the swap maturity date, the value that will be used for the index is the published value of the index. A payment will be made from one party to the other depending on the terms of the trade; however, it is important to remember that if the total return is positive, that leg will be paid by the payer to the receiver\u00a0\u2014\u00a0vice versa if it is negative.<\/p>\n<p>If a contract is unwound by trading out of it early, the buyer and seller agree to the index value at the time of trade\u00a0\u2014 just like when the TRS was initially entered into. The negotiated or traded price is used to determine final payment.<\/p>\n<p><strong>The Traded Index Value versus the Calculated Index Value<\/strong><\/p>\n<p>Multiple factors determine the negotiated index value:<\/p>\n<ul>\n<li>The calculated index value is the biggest driver.<\/li>\n<li>Supply and demand on the contract. If more people are looking to hedge, then the price will have to be adjusted to attract those looking to receive.<\/li>\n<li>Borrowing or shorting costs in the underlying markets will impact the price that is agreed to. If it is expensive to short bonds that cost will affect the price that the contract is entered into, since the financing leg, which would otherwise be adjusted, is fixed to permit standardized valuation.<\/li>\n<li>Any perception of a lag in the calculated index value, which may occur in volatile markets, would cause the traded price to deviate from the calculated price. This is mitigated to a large degree by only referencing indices from well-known providers, such as Bloomberg.<\/li>\n<\/ul>\n<p><strong>Total Return Swaps \u2014 Simple, but effective<\/strong><\/p>\n<p>As investors explore ways to manage bond and credit risk effectively and efficiently, look for them to turn more and more to total return swaps. A number of broad market indices can be traded in standardized TRS and BTRS forms, volumes are increasing and liquidity is improving; accordingly, asset managers, large and small, must understand these products and determine if they are suitable for their investment strategies.<\/p>\n\n<\/div>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <style>section[data-anchor=row-69fcc02349e9e]::before {\n\t\t\t\tbackground-color: #eeeeee;\n\t\t\t}<\/style>\n    <section class=\"bbg-row bg--custom-color  bg--eeeeee text--black bbg-row--full-bg-bleed\" data-anchor='row-69fcc02349e9e'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <div\n    class=\"bbg-column\"\n    style=\"\"\n    >\n    <div\n\tclass=\"bb-wysiwyg\"\n\t\t>\n\t<h2>Recommended for you<\/h2>\n\n<\/div>\n<div\n    class=\"bbg-spacer\"\n        style=\"height: 24px !important\"\n    >\n<\/div><script>\n    window.feed = window.feed || {};\n    window.feed['69fcc0234c8a0'] = {\"config\":{\"uuid\":\"\",\"title\":\"\",\"filter_label\":\"\",\"post_type\":\"post\",\"order_by\":\"date\",\"direction\":\"desc\",\"show_date\":\"no\",\"show_excerpt\":\"no\",\"display\":\"limit\",\"filter\":\"OR\",\"max_items\":\"3\",\"skip_cache\":\"no\",\"feed_style\":\"grid\",\"published_date\":\"\",\"show_cta\":\"\",\"featured_image\":\"yes\",\"el_class\":\"\",\"terms_post\":\"\",\"terms_page\":\"\",\"terms_attachment\":\"\",\"terms_webinar\":\"\",\"terms_bbmegamenu\":\"\",\"terms_directory\":\"\",\"terms_datalayer\":\"\",\"terms_templatera\":\"\",\"terms_bbg-fourofour\":\"\",\"terms_reusable\":\"\",\"terms_cookie_items\":\"\",\"terms_bbl_email_subscriber\":\"\",\"terms_dynamic_table_ticker\":\"\",\"terms_bfix\":\"\",\"terms_quicklinks\":\"\",\"terms_interstitial\":\"\",\"terms_slide\":\"\",\"terms_gated_content_form\":\"\",\"terms_site_alert\":\"\",\"terms_country\":\"\",\"terms_region\":\"\",\"terms\":\"\"},\"cpt\":{\"name\":\"post\",\"label\":\"Posts\",\"labels\":{\"name\":\"Posts\",\"singular_name\":\"Post\",\"add_new\":\"Add New\",\"add_new_item\":\"Add New Post\",\"edit_item\":\"Edit Post\",\"new_item\":\"New Post\",\"view_item\":\"View Post\",\"view_items\":\"View Posts\",\"search_items\":\"Search Posts\",\"not_found\":\"No posts found.\",\"not_found_in_trash\":\"No posts found in Trash.\",\"parent_item_colon\":null,\"all_items\":\"All Posts\",\"archives\":\"Post Archives\",\"attributes\":\"Post Attributes\",\"insert_into_item\":\"Insert into post\",\"uploaded_to_this_item\":\"Uploaded to this post\",\"featured_image\":\"Featured image\",\"set_featured_image\":\"Set featured image\",\"remove_featured_image\":\"Remove featured image\",\"use_featured_image\":\"Use as featured image\",\"filter_items_list\":\"Filter posts list\",\"filter_by_date\":\"Filter by date\",\"items_list_navigation\":\"Posts list navigation\",\"items_list\":\"Posts list\",\"item_published\":\"Post published.\",\"item_published_privately\":\"Post published privately.\",\"item_reverted_to_draft\":\"Post reverted to draft.\",\"item_trashed\":\"Post trashed.\",\"item_scheduled\":\"Post scheduled.\",\"item_updated\":\"Post updated.\",\"item_link\":\"Post Link\",\"item_link_description\":\"A link to a post.\",\"menu_name\":\"Posts\",\"name_admin_bar\":\"Post\"},\"description\":\"\",\"public\":true,\"hierarchical\":false,\"exclude_from_search\":false,\"publicly_queryable\":true,\"show_ui\":true,\"show_in_menu\":true,\"show_in_nav_menus\":true,\"show_in_admin_bar\":true,\"menu_position\":5,\"menu_icon\":\"dashicons-admin-post\",\"capability_type\":\"post\",\"map_meta_cap\":true,\"register_meta_box_cb\":null,\"taxonomies\":[],\"has_archive\":false,\"query_var\":false,\"can_export\":true,\"delete_with_user\":true,\"template\":[],\"template_lock\":false,\"_builtin\":true,\"_edit_link\":\"post.php?post=%d\",\"cap\":{\"edit_post\":\"edit_post\",\"read_post\":\"read_post\",\"delete_post\":\"delete_post\",\"edit_posts\":\"edit_posts\",\"edit_others_posts\":\"edit_others_posts\",\"delete_posts\":\"delete_posts\",\"publish_posts\":\"publish_posts\",\"read_private_posts\":\"read_private_posts\",\"read\":\"read\",\"delete_private_posts\":\"delete_private_posts\",\"delete_published_posts\":\"delete_published_posts\",\"delete_others_posts\":\"delete_others_posts\",\"edit_private_posts\":\"edit_private_posts\",\"edit_published_posts\":\"edit_published_posts\",\"create_posts\":\"edit_posts\"},\"rewrite\":false,\"show_in_rest\":true,\"rest_base\":\"posts\",\"rest_namespace\":\"wp\\\/v2\",\"rest_controller_class\":\"WP_REST_Posts_Controller\",\"rest_controller\":{},\"revisions_rest_controller_class\":false,\"revisions_rest_controller\":{},\"autosave_rest_controller_class\":false,\"autosave_rest_controller\":{},\"late_route_registration\":false},\"taxonomies\":[{\"taxonomy\":\"post_format\",\"terms\":[{\"term_id\":33,\"name\":\"Link\",\"slug\":\"post-format-link\",\"term_group\":0,\"term_taxonomy_id\":33,\"taxonomy\":\"post_format\",\"description\":\"\",\"parent\":0,\"count\":12,\"filter\":\"raw\"},{\"term_id\":666,\"name\":\"Link\",\"slug\":\"post-format-link\",\"term_group\":0,\"term_taxonomy_id\":666,\"taxonomy\":\"post_format\",\"description\":\"\",\"parent\":0,\"count\":2,\"filter\":\"raw\"}]},{\"taxonomy\":\"post_series\",\"terms\":{\"0\":{\"term_id\":3751,\"name\":\"Asia Centric\",\"slug\":\"asia-centric\",\"term_group\":0,\"term_taxonomy_id\":3751,\"taxonomy\":\"post_series\",\"description\":\"\",\"parent\":0,\"count\":51,\"filter\":\"raw\"},\"1\":{\"term_id\":3741,\"name\":\"Bloomberg Expert Access\",\"slug\":\"bloomberg-expert-access\",\"term_group\":0,\"term_taxonomy_id\":3741,\"taxonomy\":\"post_series\",\"description\":\"\",\"parent\":0,\"count\":10,\"filter\":\"raw\"},\"2\":{\"term_id\":3739,\"name\":\"Bloomberg Pro Tips\",\"slug\":\"bloomberg-pro-tips\",\"term_group\":0,\"term_taxonomy_id\":3739,\"taxonomy\":\"post_series\",\"description\":\"\",\"parent\":0,\"count\":58,\"filter\":\"raw\"},\"4\":{\"term_id\":3743,\"name\":\"Functions for the Market\",\"slug\":\"ffm\",\"term_group\":0,\"term_taxonomy_id\":3743,\"taxonomy\":\"post_series\",\"description\":\"\",\"parent\":0,\"count\":7,\"filter\":\"raw\"},\"5\":{\"term_id\":3770,\"name\":\"Market Dialogues\",\"slug\":\"market-dialogues\",\"term_group\":0,\"term_taxonomy_id\":3770,\"taxonomy\":\"post_series\",\"description\":\"\",\"parent\":0,\"count\":11,\"filter\":\"raw\"},\"6\":{\"term_id\":3742,\"name\":\"Need to Know\",\"slug\":\"need-to-know\",\"term_group\":0,\"term_taxonomy_id\":3742,\"taxonomy\":\"post_series\",\"description\":\"\",\"parent\":0,\"count\":15,\"filter\":\"raw\"},\"7\":{\"term_id\":3798,\"name\":\"Pricing Insights\",\"slug\":\"pricing-insights\",\"term_group\":0,\"term_taxonomy_id\":3798,\"taxonomy\":\"post_series\",\"description\":\"\",\"parent\":0,\"count\":6,\"filter\":\"raw\"},\"8\":{\"term_id\":3740,\"name\":\"Terminal Essentials\",\"slug\":\"terminal-essentials\",\"term_group\":0,\"term_taxonomy_id\":3740,\"taxonomy\":\"post_series\",\"description\":\"\",\"parent\":0,\"count\":6,\"filter\":\"raw\"}}},{\"taxonomy\":\"type\",\"terms\":{\"0\":{\"term_id\":3762,\"name\":\"Article\",\"slug\":\"article\",\"term_group\":0,\"term_taxonomy_id\":3762,\"taxonomy\":\"type\",\"description\":\"\",\"parent\":0,\"count\":1640,\"filter\":\"raw\"},\"1\":{\"term_id\":3763,\"name\":\"Case Study\",\"slug\":\"case-study\",\"term_group\":0,\"term_taxonomy_id\":3763,\"taxonomy\":\"type\",\"description\":\"\",\"parent\":0,\"count\":41,\"filter\":\"raw\"},\"3\":{\"term_id\":3765,\"name\":\"Podcast\",\"slug\":\"podcast\",\"term_group\":0,\"term_taxonomy_id\":3765,\"taxonomy\":\"type\",\"description\":\"\",\"parent\":0,\"count\":504,\"filter\":\"raw\"},\"4\":{\"term_id\":3815,\"name\":\"Press Release\",\"slug\":\"press-release\",\"term_group\":0,\"term_taxonomy_id\":3815,\"taxonomy\":\"type\",\"description\":\"\",\"parent\":0,\"count\":81,\"filter\":\"raw\"},\"5\":{\"term_id\":3766,\"name\":\"Q&amp;A\",\"slug\":\"qa\",\"term_group\":0,\"term_taxonomy_id\":3766,\"taxonomy\":\"type\",\"description\":\"\",\"parent\":0,\"count\":101,\"filter\":\"raw\"},\"6\":{\"term_id\":3767,\"name\":\"Report\",\"slug\":\"report\",\"term_group\":0,\"term_taxonomy_id\":3767,\"taxonomy\":\"type\",\"description\":\"\",\"parent\":0,\"count\":75,\"filter\":\"raw\"},\"8\":{\"term_id\":3768,\"name\":\"Video\",\"slug\":\"video\",\"term_group\":0,\"term_taxonomy_id\":3768,\"taxonomy\":\"type\",\"description\":\"\",\"parent\":0,\"count\":134,\"filter\":\"raw\"}}}],\"excluded_taxonomies\":{\"\":[]},\"post_id\":47178};\n<\/script>\n<div class=\"feed\" data-id=\"69fcc0234c8a0\"><\/div>\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n\n<div  class=\"bbg-row-container\">\n    <section class=\"bbg-row  text--white bbg-row--full-bg-bleed\" data-anchor='row-69fcc0234d879'>\n        \n        \n        <div\n            class=\"bbg-row--content\"\n                    >\n            \n            <div\n    class=\"bbg-column\"\n    style=\"\"\n    >\n    <div class=\"bbg-interstitial\" aria-label=\"interstitial\" tabindex=\"0\">\n\t<style>\n\t\t.bbg-interstitial #card_2.bbg-card_hasCta{\n\t\t\tbackground: url(https:\/\/assets.bbhub.io\/image\/v1\/resize?width=auto&amp;type=webp&amp;url=https:\/\/assets.bbhub.io\/professional\/sites\/41\/Interstitial_bg.png);\n\t\t\t\tbackground-repeat: no-repeat;\n\t\t\t\tbackground-position: center center;\n\t\t\t\tbackground-size: cover;\n\t\t\tpadding: 104px;\n\t\t\t\n\t\t\t\n\t\t}\n\t\t.bbg-interstitial #card_2.bbg-card_hasCta .bbg-card__content, .bbg-interstitial #card_2.bbg-card_hasCta .bbg-card__content p{\n\t\t\tcolor:white;\n\t\t}\n\t\t@media (max-width: 768px) {\n\t\t\t.bbg-interstitial #card_2.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 32px;\n\t\t\t}\n\t\t}\n\t\t@media (max-width: 480px) {\n\t\t\t.bbg-interstitial #card_2.bbg-card_hasCta{\n\t\t\t\tpadding: 80px 18px;\n\t\t\t}\n\t\t}\n\t<\/style>\n\t<div class=\"wpb_content_element bbg-card  bbg-card-dark bbg-card_hasCta has_interstitial\" id=\"card_2\" data-card_type=\"no_image\">\n  \n  \n  <div class=\"bbg-card__innerwrapper\">\n    <div class=\"bbg-card__content\">\n      \n      \n                      <h3 class=\"bbg-card__title\">Request a Demo<\/h3>\n      \n              <div class=\"bbg-card__wysiwyg bb-wysiwyg\"><p>Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. Now, let us do that for you.<\/p>\n<\/div>\n          <\/div>\n\n          \n<div\n  id=\"cta_1239685984053439983\"\n  class=\"wpb_content_element bbg-cta icon icon-arrow\">\n  <style>\n    \n    \n    \n  <\/style>\n  <div\n    class=\"bbg-cta-link link-holder\"\n    data-links-type=\"cta-links\">\n    <p class=\"bbg-cta-p right\">\n      <a\n        class=\"bbg-cta-link link interstitial_cta\"\n        href=\"https:\/\/www.bloomberg.com\/professional\/request-demo\/\"\n        target=\"\"\n        rel=\"\"\n        data-section-name=\"\"\n                role=\"button\"\n        aria-label=\"Learn more\"\n        >\n                <\/a>\n    <\/p>\n  <\/div>\n<\/div>\n\n      <\/div>\n\n  <\/div>\n\n<\/div>\n\n\n<\/div>\n\n\n                    <\/div>\n    <\/section>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>As investors explore ways to manage bond and credit risk effectively and efficiently, look for them to turn more and more to total return swaps.  <\/p>\n","protected":false},"author":1610,"featured_media":31103,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"template-article.php","format":"standard","meta":{"_yoast_wpseo_primary_category":"","footnotes":""},"categories":[453,444],"tags":[550,531,526],"series":[],"class_list":["post-47178","post","type-post","status-publish","format-standard","hentry","category-markets","category-trading","tag-buy-side","tag-electronic-trading","tag-fixed-income","type-article"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.11 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Total Return Swaps 101 | Insights | Bloomberg Professional Services<\/title>\n<meta name=\"description\" content=\"As investors explore ways to manage bond and credit risk effectively and efficiently, look for them to turn more and more to total return swaps.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Total Return Swaps 101 | Insights | Bloomberg Professional Services\" \/>\n<meta property=\"og:description\" content=\"As investors explore ways to manage bond and credit risk effectively and efficiently, look for them to turn more and more to total return swaps.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/\" \/>\n<meta property=\"og:site_name\" content=\"Bloomberg Professional Services\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/bloomberglp\" \/>\n<meta property=\"article:published_time\" content=\"2019-08-05T14:12:20+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-04-23T17:39:05+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/assets.bbhub.io\/image\/v1\/convert?type=auto&amp;url=https%3A%2F%2Fassets.bbhub.io%2Fprofessional%2Fsites%2F10%2Fm1376327.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1600\" \/>\n\t<meta property=\"og:image:height\" content=\"1066\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"eengelman2\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@theterminal\" \/>\n<meta name=\"twitter:site\" content=\"@theterminal\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"eengelman2\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/\"},\"author\":{\"name\":\"eengelman2\",\"@id\":\"https:\/\/www.bloomberg.com\/professional\/#\/schema\/person\/6e9a6ee215ba4d77ab9c4782fd6680e4\"},\"headline\":\"Total Return Swaps 101\",\"datePublished\":\"2019-08-05T14:12:20+00:00\",\"dateModified\":\"2024-04-23T17:39:05+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/\"},\"wordCount\":\"1023\",\"publisher\":{\"@id\":\"https:\/\/www.bloomberg.com\/professional\/#organization\"},\"keywords\":[\"Buy-Side\",\"Electronic Trading\",\"Fixed Income\"],\"articleSection\":[\"Markets\",\"Trading\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/\",\"url\":\"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/\",\"name\":\"Total Return Swaps 101 | Insights | Bloomberg Professional Services\",\"isPartOf\":{\"@id\":\"https:\/\/www.bloomberg.com\/professional\/#website\"},\"datePublished\":\"2019-08-05T14:12:20+00:00\",\"dateModified\":\"2024-04-23T17:39:05+00:00\",\"description\":\"As investors explore ways to manage bond and credit risk effectively and efficiently, look for them to turn more and more to total return swaps.\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.bloomberg.com\/professional\/#website\",\"url\":\"https:\/\/www.bloomberg.com\/professional\/\",\"name\":\"Bloomberg Professional Services\",\"description\":\"\",\"publisher\":{\"@id\":\"https:\/\/www.bloomberg.com\/professional\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.bloomberg.com\/professional\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.bloomberg.com\/professional\/#organization\",\"name\":\"Bloomberg Professional Services\",\"url\":\"https:\/\/www.bloomberg.com\/professional\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.bloomberg.com\/professional\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/assets.bbhub.io\/image\/v1\/convert?type=auto&amp;url=https%3A%2F%2Fassets.bbhub.io%2Fprofessional%2Fsites%2F41%2Flogo.png\",\"contentUrl\":\"https:\/\/assets.bbhub.io\/image\/v1\/convert?type=auto&amp;url=https%3A%2F%2Fassets.bbhub.io%2Fprofessional%2Fsites%2F41%2Flogo.png\",\"width\":\"512\",\"height\":\"103\",\"caption\":\"Bloomberg Professional Services\"},\"image\":{\"@id\":\"https:\/\/www.bloomberg.com\/professional\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.instagram.com\/bloomberg\/\",\"https:\/\/www.linkedin.com\/showcase\/bloomberg-professional-service\/\",\"https:\/\/www.facebook.com\/bloomberglp\",\"https:\/\/twitter.com\/theterminal\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.bloomberg.com\/professional\/#\/schema\/person\/6e9a6ee215ba4d77ab9c4782fd6680e4\",\"name\":\"Bloomberg Professional Services\",\"url\":\"https:\/\/www.bloomberg.com\/professional\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Total Return Swaps 101 | Insights | Bloomberg Professional Services","description":"As investors explore ways to manage bond and credit risk effectively and efficiently, look for them to turn more and more to total return swaps.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/","og_locale":"en_US","og_type":"article","og_title":"Total Return Swaps 101 | Insights | Bloomberg Professional Services","og_description":"As investors explore ways to manage bond and credit risk effectively and efficiently, look for them to turn more and more to total return swaps.","og_url":"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/","og_site_name":"Bloomberg Professional Services","article_publisher":"https:\/\/www.facebook.com\/bloomberglp","article_published_time":"2019-08-05T14:12:20+00:00","article_modified_time":"2024-04-23T17:39:05+00:00","og_image":[{"width":1600,"height":1066,"url":"https:\/\/assets.bbhub.io\/image\/v1\/convert?type=auto&amp;url=https%3A%2F%2Fassets.bbhub.io%2Fprofessional%2Fsites%2F10%2Fm1376327.jpg","type":"image\/jpeg"}],"author":"eengelman2","twitter_card":"summary_large_image","twitter_creator":"@theterminal","twitter_site":"@theterminal","twitter_misc":{"Written by":"eengelman2","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/#article","isPartOf":{"@id":"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/"},"author":{"name":"eengelman2","@id":"https:\/\/www.bloomberg.com\/professional\/#\/schema\/person\/6e9a6ee215ba4d77ab9c4782fd6680e4"},"headline":"Total Return Swaps 101","datePublished":"2019-08-05T14:12:20+00:00","dateModified":"2024-04-23T17:39:05+00:00","mainEntityOfPage":{"@id":"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/"},"wordCount":"1023","publisher":{"@id":"https:\/\/www.bloomberg.com\/professional\/#organization"},"keywords":["Buy-Side","Electronic Trading","Fixed Income"],"articleSection":["Markets","Trading"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/","url":"https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/","name":"Total Return Swaps 101 | Insights | Bloomberg Professional Services","isPartOf":{"@id":"https:\/\/www.bloomberg.com\/professional\/#website"},"datePublished":"2019-08-05T14:12:20+00:00","dateModified":"2024-04-23T17:39:05+00:00","description":"As investors explore ways to manage bond and credit risk effectively and efficiently, look for them to turn more and more to total return swaps.","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.bloomberg.com\/professional\/insights\/trading\/total-return-swaps-101\/"]}]},{"@type":"WebSite","@id":"https:\/\/www.bloomberg.com\/professional\/#website","url":"https:\/\/www.bloomberg.com\/professional\/","name":"Bloomberg Professional Services","description":"","publisher":{"@id":"https:\/\/www.bloomberg.com\/professional\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.bloomberg.com\/professional\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.bloomberg.com\/professional\/#organization","name":"Bloomberg Professional Services","url":"https:\/\/www.bloomberg.com\/professional\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.bloomberg.com\/professional\/#\/schema\/logo\/image\/","url":"https:\/\/assets.bbhub.io\/image\/v1\/convert?type=auto&amp;url=https%3A%2F%2Fassets.bbhub.io%2Fprofessional%2Fsites%2F41%2Flogo.png","contentUrl":"https:\/\/assets.bbhub.io\/image\/v1\/convert?type=auto&amp;url=https%3A%2F%2Fassets.bbhub.io%2Fprofessional%2Fsites%2F41%2Flogo.png","width":"512","height":"103","caption":"Bloomberg Professional Services"},"image":{"@id":"https:\/\/www.bloomberg.com\/professional\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.instagram.com\/bloomberg\/","https:\/\/www.linkedin.com\/showcase\/bloomberg-professional-service\/","https:\/\/www.facebook.com\/bloomberglp","https:\/\/twitter.com\/theterminal"]},{"@type":"Person","@id":"https:\/\/www.bloomberg.com\/professional\/#\/schema\/person\/6e9a6ee215ba4d77ab9c4782fd6680e4","name":"Bloomberg Professional Services","url":"https:\/\/www.bloomberg.com\/professional"}]}},"_links":{"self":[{"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/posts\/47178","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/users\/1610"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/comments?post=47178"}],"version-history":[{"count":1,"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/posts\/47178\/revisions"}],"predecessor-version":[{"id":56259,"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/posts\/47178\/revisions\/56259"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/media\/31103"}],"wp:attachment":[{"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/media?parent=47178"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/categories?post=47178"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/tags?post=47178"},{"taxonomy":"post_series","embeddable":true,"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/series?post=47178"},{"taxonomy":"type","embeddable":true,"href":"https:\/\/www.bloomberg.com\/professional\/wp-json\/wp\/v2\/type?post=47178"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}