Adapting to Changing Bond Markets

Unlike traditional core bonds, the Fund has the flexibility to actively manage interest rate risk and credit risk.

Duration

7

6

5

4

3

2

1

0

-1 

-2 

.81

Correlation


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Weightings below zero result from the Fund using "short" positions to express negative views of a sector, so the Fund may generate a positive return if the value of the sector declines.

Traditional bonds represented by the Barclays Global Aggregate Bond Index.
See how credit risk is related to yield.
Credit Risk
  • Refers to the potential that a borrower may not repay a loan in full
  • Investors are often compensated for this greater risk by receiving a higher yield
See how rising interest rates affect a bond's value.
Duration
(in years)
Move the slider bar to adjust the rise in interest rates.
Adjust the dial to change duration.
1.00% Increase in Interest Rate
Bond Values Fall
Interest Rate Risk
  • Also known as duration
  • A bond's sensitivity to a change in interest rates
  • For every 1% change in interest rates, a bond's price will move approximately 1% in the opposite direction for every year of duration