[Verse 1] When you want to track an index perfectly aligned Full replication is the strategy you'll find Buy every single bond that's in the target pool Mirror every holding with this passive rule From corporate debt to government notes so bright Hold them all together, get the weighting right [Chorus] Full replication, mirror every bond Hold them all, keep the index strong Every security, every single one Till your portfolio and benchmark become one Full replication, that's the perfect way To match the index every single day [Verse 2] Implementation brings some challenges your way Transaction costs can eat your returns away Smaller bonds are harder to acquire and hold Liquidity issues when the market turns cold Minimum lot sizes make it hard to scale Perfect replication sometimes bound to fail [Chorus] Full replication, mirror every bond Hold them all, keep the index strong Every security, every single one Till your portfolio and benchmark become one Full replication, that's the perfect way To match the index every single day [Bridge] When does this strategy work the very best? Large portfolios passing every test Stable indices without too much change Bonds that are liquid with a normal range If you've got the capital and time to spare Full replication gets you nearly there [Verse 3] Tracking error drops to almost nothing flat Your performance matches where the index is at But watch the costs and complexity rise As bond count grows before your very eyes Reinvestment challenges when coupons pay Managing cash flows every single day [Chorus] Full replication, mirror every bond Hold them all, keep the index strong Every security, every single one Till your portfolio and benchmark become one Full replication, that's the perfect way To match the index every single day [Outro] Perfect tracking comes with perfect price Full replication's worth the sacrifice When you need precision and you have the scale This passive strategy will never fail
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