Ms. Smith is the portfolio manager of the Good Corporate Bond Fund, which invests primarily in investment-grade corporate bonds. Th e fund currently has an overweight within the retail industrial sector bonds of retailers. Ms. Smith is concerned that increased competition from internet retailers will negatively aff ect the earnings and cash fl ow of the traditional retailers. Th e fund is also currently underweighted in the US dollar-denominated bonds of European issuers placed in the United States, which she believes should benefi t from increased opportunities aff orded by European Union. She believes that many of these companies may come to market with new US dollar issues to fund some of their expansion throughout Europe.

Formulate and support a strategy for Ms. Smith that will capitalize on her views about the retail and European corporate sectors of her portfolio. What factors might negatively impact this strategy?