How much can active bond management raise returns?

The paper focuses on bond portfolio management in the United States. Bond portfolios are an effective diversifier to improve a long-term investor's risk/return ratios in mixed portfolios. Bond/stock portfolio returns are very insensitive to alternative portfolio strategies. Bond returns have been linear to portfolio risk for long-term portfolios which were annually rebalanced. It is widely believed that active bond management can raise returns in the 1950 and 1960. A subsequent simulation run, which bought twenty-year bonds only when twenty-year rates were over five percent, the interest rate timing was not as effective as expected. Bond portfolio strategy was initially specified as the generally superior buy-long-and-hold strategy.