U.S. Bond Duration

U.S. bond mutual funds and ETFs can own U.S. fixed income securities... U.S. bond mutual funds and ETFs can own U.S. fixed income securities with different duration, which measures a bond's likely price change due to a change in interest rates. Ultra-short duration bond mutual funds and ETFs invest the majority of their assets in U.S. debt securities maturing in less than 1 year (and often, only a few months like T-bills). short duration bond mutual funds and ETFs invest the majority of their assets in U.S. debt securities maturing between 1 and 3 years. intermediate duration bond mutual funds and ETFs invest the majority of their assets in U.S. debt securities maturing in 3 to 6 years. long duration U.S. bond mutual funds and ETFs invest the majority of their assets in debt securities maturing over 6 years from now (eg. Treasury Bonds). Investors who worry that interest rates will rise tend to purchase shorter-duration U.S. debt, while those who think interest rates may fall usually buy longer duration U.S. debt. An important point to note is that longer duration debt carries more interest rate risk - aka price fluctuates more with changes in interest rates - when compared to short or intermediate duration debt. Last Updated: 12/26/2024 View more View less

U.S. bond mutual funds and ETFs can own U.S. fixed income securities with different duration, which measures a bond's likely price change due to a change in interest rates. Ultra-short duration... U.S. bond mutual funds and ETFs can own U.S. fixed income securities with different duration, which measures a bond's likely price change due to a change in interest rates. Ultra-short duration bond mutual funds and ETFs invest the majority of their assets in U.S. debt securities maturing in less than 1 year (and often, only a few months like T-bills). short duration bond mutual funds and ETFs invest the majority of their assets in U.S. debt securities maturing between 1 and 3 years. intermediate duration bond mutual funds and ETFs invest the majority of their assets in U.S. debt securities maturing in 3 to 6 years. long duration U.S. bond mutual funds and ETFs invest the majority of their assets in debt securities maturing over 6 years from now (eg. Treasury Bonds). Investors who worry that interest rates will rise tend to purchase shorter-duration U.S. debt, while those who think interest rates may fall usually buy longer duration U.S. debt. An important point to note is that longer duration debt carries more interest rate risk - aka price fluctuates more with changes in interest rates - when compared to short or intermediate duration debt. Last Updated: 12/26/2024 View more View less