Sentences with phrase «duration of the bond»

The average duration of a bond fund says a lot about how the fund will respond to interest rates, and thus perform.

With the low duration of its bond holdings, the fund is clearly trying to protect its investors against rising interest rates.

On their websites, many mutual fund companies report the average duration of the bonds in their funds.

The average duration of a bond fund should, in general, match the period of time in which you expect to keep your investment dollars in the fund.

Given the higher duration of these bonds, they are more volatile than regular coupon bonds.

Finally, fixed - rate bonds offer a fixed interest rate for the total duration of the bond, but they can not be redeemed before maturity.

The modified duration of a bond is a measure of its price sensitivity to interest rates movements, based on the average time to maturity of its interest and principal cash flows.

Of course, bond mutual fund turnover can vary significantly due to the average duration of the bonds within the fund.

We call this second, more practical definition the modified duration of a bond.

In order to address interest rate sensitivity in a low rate environment, many investors will reduce the average duration of their bond portfolios by moving to shorter maturities.

The long duration of bonds in this sector make it highly vulnerable to when interest rates begin to rise — the prices of these bonds will fall more quickly and by a larger amount when interest rates begin to rise.

The shorter duration of the bond effectively shortens the investment horizon that is required to «immunize» the investor's terminal wealth (though not necessarily year - to - year values) from market fluctuations.

Negative convexity risk the convexity of a bond shows the rate of change of the dollar duration of a bond (modified duration expressed in dollars rather than years or percentage).

The usefulness of the risk - adjusted return concept is that we can use it to evaluate a proposed strategy to determine whether it has historically been a better way to increase returns (or reduce risk) than simply adjusting any of several other well known variables (e.g., stock vs. bond allocation, duration of bond holdings, credit quality of bond holdings, etc.).

Noload bond funds will have turnover that also varies, because of the average duration of the bonds in the fund.

It's a bit involved: you have to take the present value of each of the bond's cash flows, divide each by the total present value of all the cash flows, and then add up all of these individual durations to get the total duration of the bond.

So, how can a do - it - yourself investor find out what the duration of a bond is?

This measure indicates what the market thinks the inflation rate will be over the next five - or ten - years, depending on the duration of the bond used.

By locking in current low rates for a longer period of time, the duration of the bond indices has increased to historic lengths.

The duration of a bond fund will have a big impact on how much rising interest rates will damage returns.

The duration of the bond portion of our clients» portfolios currently is approximately 4.4 years.

The higher the duration of a bond or fund the higher the potential for volatility in both directions when rates move.

While longer - duration bonds can provide portfolio diversification benefits, shortening the duration of your bond portfolio can potentially help manage losses due to rising interest rates.

The duration of a bond is related to its maturity, with longer maturity bonds generally having higher durations.

Shortening the duration of your bond portfolio can potentially help manage losses due to rising interest rates.

Advanced Bonds In the advanced bonds tutorial you will learn about the pricing structure of bonds, how to calculate yield, formulas for the duration of bonds and more.

Yield — A combination of the dollar price and the interest rate for the duration of the bond, expressed as a percentage.

Interest Rate — The amount of interest the government agrees to pay you for the duration of the bond.

The interest rate combined with the dollar price over the duration of the bond is called the yield.

We can solve for the market's expectation for annualized real (inflation adjusted) growth over the duration of the bond simply by subtracting out this estimated inflation rate from the yield on the US government bond.

LONDON (AP)-- European stock markets dipped Thursday while the euro struck two - week highs against the dollar after the European Central Bank left its key interest rates unchanged and decided against extending the duration of its bond - buying stimulus...

In such an event, the central bank could extend the duration of its bond - buying program, which is currently set to end in March 2017.

While this can be true depending on the duration of bonds owned and / or for nominal returns over an extended period of time, it is

The duration of our bond portfolio remains relatively short as a means designed to protect against rising interest rates.

The duration of a bond is related to its maturity, with longer maturity bonds generally having higher durations.

Similarly, if an investor expects that market interest rates will go up, the will decrease the duration of their bond portfolio so that the drop in price will be minimized.

But the duration of a bond fund includes not just the maturity when you get your principal back, but it also takes into account when you get the cash flows back, right.

One of my focuses in client review meetings is the duration of any bond funds / ETFs that they hold.

Karen had read my post on bond duration, where I explained that investors should try to match the duration of their bond fund to their time horizon.

If you fear rising interest rates, the prudent strategy is to reduce the duration of your bond portfolio.

The key message for investors is to make sure your time horizon is at least as long as the duration of your bond fund.

As a result, if the price of the bond changes over the duration of the bond, this affects the ratio of the price to the coupon.

A zero - coupon bond makes no annual or semi-annual coupon payments for the duration of the bond.

The higher the duration of a bond or bond fund, the more sensitive it is to interest rates, and the more value it can gain or lose as rates change.

Shortening the duration of your bond portfolio can potentially help manage losses due to rising interest rates.

The duration of a bond fund can tell you roughly how much its value is likely to change in response to a change in interest rates.

As we've discussed before, the duration of a bond fund is an important indicator of its risk level because the longer the duration, the more the fund's price will fluctuate as a result of changes in market interest rates.

I don't think I'm prepared to double the duration of my bond holdings to get 20 or 30 basis points more in return.