Sometimes investors get their original principal back before the maturity date.
Others include credit quality and bond type, not to mention fund management and fees for those my wife wants almost no sex investing in bond funds.
A bond's maturity is the length of time until the principal must be paid back.
Most bonds have a term of up to 30 years.For example, a bond with a duration of 6 years would normally be twice as sensitive to interest-rate changes as one with a duration of 3 years regardless of when they mature or what they pay in interest.For example, a bond with a duration of 5 years would be expected to rise 5 in value for every 1-percentage-point decline in interest rates (remember that interest rates and bond prices move in opposite directions).Keep in mind that duration is just one consideration when assessing risks related to your fixed income portfolio.Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information.An exchangeable bond, on the other hand, allows the bondholder to exchange the bonds for the stock of a company other than the bond issuer.The average effective duration figure also determines where the fund lands along the Interest-Rate Sensitivity axis of the Morningstar Fixed-Income Style Box, with ratings ranging from limited to moderate to extensive.All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your e subject line of the e-mail you send will be "m: ".If interest rates go up by one percentage point, the bond's value would be expected to drop.For those that don't-some corporate bonds, for example-duration might be useful to measure relative rate sensitivity between the two types, but prospective investors will need to bear in mind that those bonds won't necessarily move in sync with government bonds and Treasuries.To see the duration of your bonds, CDs, and bond funds.While diversification does not ensure a profit or guarantee against loss, a lack of diversification may result in heightened volatility of your portfolio value.By using this service, you agree to input your real e-mail address and only send it to people you know.
However, Treasury bonds (as well as other types of fixed income investments) are sensitive to interest rate risk, which refers to the possibility that a rise in interest rates will cause the value of the bonds to decline.Investors can use duration to help estimate how a bond or bond fund's value would be affected by a change in interest rates.In the bond fund's online profile under Portfolio Data.The information contained within should not be a person's sole basis for making an investment decision.This is because the relationship between bond prices and bond yields is not linear but convexit follows the line "Yield 2" in the diagram below.Answer: "Maturity" and "duration" may sound somewhat alike, and both measures are expressed in years.A bond ladder, depending on the types and amount of securities within it, may not ensure adequate diversification of your investment portfolio.Select from a variety of individual bond and bond funds that may meet your investing needs.For example, if rates were to rise 1, a bond or bond fund with a 5-year average duration would likely lose approximately 5 of its value.Using the illustrative chart, you can see how when yields are low, a 1 increase in rates will lead to a larger change in a bonds price than when beginning yields are high.
Under each bond's Bond Details page.
Bond Basics Part 3, schroders fixed income portfolio manager, Gareth Isaac, explains bond pricing.