Duration

Duration is a measure used to estimate how sensitive a bond or bond portfolio’s price is to a change in interest rates.

A simple example

A bond portfolio with a duration of five years would be expected to lose roughly 5% if yields rose one percentage point, all else equal.

Why this matters to income investors

Longer duration generally means greater price sensitivity to a given rate change, although the estimate is not exact.

How to use duration in your research

Use the same duration definition when comparing funds, and consider credit spreads, calls, prepayments, and large rate moves as separate influences.

This material is general education and information, not individualized investment, tax, or legal advice.