Two Major Asset Managers Discuss How Bond Investors Should Deal With Duration

Duration: d(y)o͝orˈāSH(ə)n/ Noun -- The time in which something continues. Also, the sensitivity of a bond’s price to changes in its yield.

It's no secret that bond investors seeking discernible returns have had a hard time of late. With yields on a large swath of government debt hovering near zero - or even less - the temptation is to move into ever riskier securities to generate some (any!) sort of return. Investing in bonds with a longer-duration can also help boost returns, since investors are typically compensated for bearing the extra risk of long-term inflation or eventual interest rate rises, both of which would tend to erode the yield generated by the investments.