what is a roll down return 
roll down returns come from maximizing a bond s yield by exploiting the yield curve the yield curve is a chart that illustrates the relationship between the yields of bonds and their maturities the curve typically plots the yield on the vertical axis and the time to maturity on the horizontal axis in a roll down situation if you bought a bond that is now on the steeper part of the yield curve and you hold while its maturity shortens but market yields stay relatively stable the bond s price will likely increase as it rolls down the yield curve toward its par value this contributes to your total return over and above the interest income the bond generates 1the size of the roll down return varies greatly between long and short term dated bonds roll downs are smaller for long dated bonds trading away from par than short dated bonds understanding a roll down returna bond investor may calculate the return on a bond in several ways the yield to maturity ytm is the rate of return if the bond is held until it reaches its maturity date the current yield is the total of the coupon payments owed on the bond when purchased roll down returns are a third way to assess a bond s earnings the roll down return depends on the shape of the yield curve which is a visual representation of the yields for maturities ranging from one month to 30 years assuming the yield curve is normal its slope is upward to the right the rate earned on longer term bonds will be higher than that earned from short term bonds 