What are short duration bonds?
A short duration bond is generally a bond with a short time to maturity. At AXA IM we define this period as 5 years or less. Short-term bonds generally carry less uncertainty because the principal is repaid more quickly and can be reinvested earlier. However, duration is more than just term to maturity.
Maturity versus duration
Maturity is simply the number of years left until the bond’s principal is repaid. Duration takes maturity into account but also bond coupon rates and yield. When coupons are included, the bond's duration number (in years) will always be less than the maturity number. Generally, bonds with shorter maturities or higher coupons will have shorter durations.
What does duration indicate?
Duration is considered an indicator of one of the key risks in fixed income investing – interest rate risk. The calculation of duration essentially measures how sensitive the value of future cash flows is to changes in interest rates. The shorter a bond’s duration, the less the bond’s price will change when interest rates move, thus short duration bonds are less exposed to interest rate risk.
An evolving process: Understanding ESG challenges and opportunities in Asian credit
Home to some of the world’s pre-eminent economic growth engines, Asia’s credit market is gaining increasing traction from global investors - as is its addressing of environmental, social and governan ...
COVID-19 has shaken up high yield and put opportunities on the table
The asset class is always prepared for a crisis, but the uneven impact of the virus means fundamental credit analysis is more important than ever
Why inflation-linked bonds could offer value in the post-COVID-19 environment
Inflation in 2020 will be close to zero, a level priced in by the market
Is inflation dead?
Inflation has been suppressed in a number of developed countries for decades. Hence you often hear the claim that, at least in major economies, inflation is dead. But is that really true?
What is the impact of QE and ultra-low monetary policy on inflation-linked bonds?
As the world was expecting to see a return to higher interest rates and an eventual end to quantitative easing (QE) across several economies only two years ago, it is finding itself in an environment ...
What impact will COVID-19 have on inflation? The AXA IM Outlook
The coronavirus outbreak has undoubtedly had a large impact on economies across the globe. Already by May this year, we have seen the first drastic falls in national gross domestic product (GDP) in c ...