Short duration bonds
What are short duration bonds?
Short duration bonds are bonds that have a shorter time to maturity, typically less than five years. Duration measures how sensitive a bond’s price is to yield movements, i.e. changes in government bond yields and credit spreads.
Who could benefit from short duration?
Investors currently in cash who are unhappy with returns and are willing to take on more risk
Fixed income investors who are worried about renewed volatility, rising yields and liquidity conditions.
What to look for in a short duration bond fund
Is the low duration a direct outcome of using short duration bonds or derivatives?
How diversified is the portfolio in terms of sectors, countries and issuers?
How much of the fund matures within 1 year?
AXA Investment Managers short duration solutions
What are the risks to consider?
The risk of default on a debt that may arise from a borrower failing to make required payments
The price sensitivity of the bonds to changes in yields.
The risk of not being able to trade quickly enough in the market without impacting the market price.
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