| dc.description.abstract | The focus of our thesis centers on making the NBP Norwegian Aggregated Regular Market Index investible. This was achieved by constructing an index tracker that seeks to track the index as closely as possible while consisting of a more manageable number of securities. Additionally, the study aims to offer insight into how bond portfolios are affected by an environment characterized by increasing interest rates, through analyzing the performance of the index tracker in such an environment. We find that it is possible to track the portfolio closely with only a few securities, which allows an investor to reasonably presume a level of risk equivalent to that of the index and expect similar returns. Further, we did not find the portfolio to react to the increasing interest rates, as we expected it to, though we find that the return of the portfolio proved to be more volatile in periods of both increasing and decreasing interest rates. Overall, this research provides valuable insights for investors wanting to be exposed to the Norwegian Bond Market in times of rising interest rates. | |
