Duration
Definition
What is Duration?
A measure of a fixed-income portfolioThe complete collection of investments owned by an investor or managed under one mandate.'s sensitivity to changes in interest rates.
Example in practice
How This Looks in Practice
A bond fundA fund that invests mainly in bonds with the aim of earning interest income and possible capital gains. with duration of five years may fall roughly 5% if yields rise one percentage point, before other effects.
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Related Terms
Asset Allocation
The percentage of a portfolio invested across asset classes such as cash, bonds, shares, and property.
Portfolio MetricsDiversification
Spreading investments across assets, issuers, sectors, or markets to reduce dependence on one exposure.
Portfolio MetricsConcentration
The degree to which a portfolio depends on a small number of holdings, sectors, or issuers.
Investor TermsKnow Your Customer
The identity and due-diligence checks a financial institution performs before serving an investor.