Let bonds be bonds – don’t fear duration
by Matt Brill, Senior Portfolio Manager, Invesco Fixed Income, Invesco Canada
Often investors become concerned about duration in a bond portfolio, believing that if interest rates rise, duration will increase the potential for losses.
Matt Brill, Senior Portfolio Manager of Invesco Global Bond Fund, discusses why a fixed-income portfolio should include some duration if it is to provide an adequate buffer when equities fall.
Key takeaways
Investors should consider that there are mitigating factors – not all duration is created equal:
- Corporate securities may benefit from tightening credit spreads when interest rates rise
- Duration can provide a negative correlation to equities in the event of an equity correction or geopolitical event
- If duration is eliminated from a bond portfolio, the remaining exposure is typically credit spread – which is correlated to equities
Visit InvescoGlobalBond.ca for more perspective on Invesco Global Bond Fund and how the Invesco Fixed Income† team is addressing today’s fixed income challenges.
This post was originally published at Invesco Canada Blog
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