How do you read Duration (rate sensitivity)?

The longer the duration, the more the price swings with rates. In 2022, when rates rose sharply, long-duration bond funds fell far more than short-duration ones.

Duration (rate sensitivity)

ETFs and bonds

Roughly how much the price of a bond or a bond fund changes when interest rates move by one point.

How it is worked out

It is measured in years. A duration of 6 means roughly a 6% fall in price if rates rise one point, and roughly a 6% rise if they fall one.

How to read it

The longer the duration, the more the price swings with rates.
In 2022, when rates rose sharply, long-duration bond funds fell far more than short-duration ones.

Example

A fund with a duration of 17 and a one-point rise in rates: a fall in price of about 17%.

Related terms

The other pages on US stocks, free to read. On the company pages, the last three fiscal years are open to everyone, five with a free account, and every year with Ploutos Investor.

US stocksThe market today, the sectors, the largest companies and the week's results.The market's sectorsThe 11 sectors side by side: returns, share of the market, median P/E and dividend.Compare stocksTwo companies side by side: price over up to ten years, with and without dividends, and every figure.US dividend stocksEach dividend's yield next to whether the company's cash covers it and whether it was ever cut.

Explanations of terms for learning, with examples from SEC filings.