How Important is Bond Duration?
Very important. Over the past 18 months we have written several articles (http://www.academywealthadvisers.com/rick-welch-what-is-bond-duration) on bond duration, which is defined as "the sensitivity of a bonds' price to changes in interest rates." For much of 2013 and into 2014, we used a low to the ground approach for bond portfolio construction with a target duration of 3 to 4 years. Just last week we revised our approach to include a target duration of about 5 years, lengthening duration slightly. There is, however, more to managing a fixed income or bond portfolio than just keeping a close eye on duration. The link below entitled "Bonds: Duration Isn't Everything" offers an interesting and informative view of other factors which can impact total return.
www.lordabbett.com/en/perspectives/fixedincomeinsights/bonds-duration-is...
