[Verse 1]
When you've got ten thousand bonds to track
But your budget won't support that stack
Stratified sampling is the way
To build your index smart today
Divide the universe by sectors first
Duration, credit rating, rating thirst
Pick representatives from every group
Keep your tracking error in the loop
[Chorus]
Sample smart, sample right
Stratified sampling gets it right
Fewer bonds but same exposure
Systematic composition
Match the index with precision
That's stratified sampling optimization
[Verse 2]
Start with cells that mirror your benchmark
Government, corporate, make your mark
Short-term, medium, and long duration
Credit quality across the nation
From each cell you pick the best
Liquidity and yield will pass the test
Weight them just like in the index
Now your portfolio's ready to mix
[Chorus]
Sample smart, sample right
Stratified sampling gets it right
Fewer bonds but same exposure
Systematic composition
Match the index with precision
That's stratified sampling optimization
[Bridge]
Risk factors matched across the board
Duration risk you can't ignore
Credit spread and sector weight
Quality ratings replicate
Fewer holdings, lower cost
Key characteristics are never lost
[Verse 3]
Monitor your tracking error daily
Does your sample work? Check it really
Rebalance when the drifting starts
Optimization is an art
Cell-by-cell methodology
Keeps you close to what should be
Representative sampling done
Index replication's won
[Chorus]
Sample smart, sample right
Stratified sampling gets it right
Fewer bonds but same exposure
Systematic composition
Match the index with precision
That's stratified sampling optimization
[Outro]
From thousands down to hundreds now
Stratified sampling shows you how
Match performance, cut the cost
No key exposures will be lost