Groundlearn / Glossary / Immunisation
Immunisation
A CFA term, defined in plain English with the distinction examiners test.
What it means
Structuring a bond portfolio so that price and reinvestment effects cancel, locking in a return over a horizon.
The exam angle
Requires matching duration to the horizon and rebalancing as time passes and yields move. It protects against parallel shifts, not twists.
Where it appears in the syllabus
- Asset AllocationCFA Level III · exam weight 15–20% · Capital market expectations, allocation principles, real-world constraints.
- Fixed IncomeCFA Level II · exam weight 10–15% · Term structure dynamics, arbitrage-free valuation, embedded options, CDS.
Related terms
- Currency hedgingUsing forwards, futures or options to reduce a portfolio’s exposure to exchange rate movements on foreign assets.
- Efficient frontierThe set of portfolios offering the highest expected return for each level of risk.
- Liability-driven investingManaging a portfolio against the liabilities it must fund rather than against a market index.
- RebalancingTrading back to target weights after market moves have shifted them.
- Reinvestment riskThe risk that coupons and principal must be reinvested at a lower rate than expected.
- Risk budgetingAllocating a portfolio’s total risk across strategies or managers, rather than allocating its capital.
Educational content only. This is not financial, investment, legal or regulatory advice. Check the official curriculum for your own exam before relying on any definition here.
Practise it in Cornerstone
Snapshot cards and five-question sessions for CFA® and FRM® candidates, free on Android and offline. The full glossary is in the app too, with search.
About CornerstoneOr get a free practice question every day on the Cornerstone WhatsApp channel.