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Animal Spirits Podcast

Talk Your Book: Higher For Longer

May 20, 2024
Ben Carlson and Michael Batnick are joined by Alex Morris, President and Chief Investment Officer of F/m Investments, to discuss bond concepts like duration, maturity, and convexity. They delve into the psychology of bond bear markets, TIPS performance, and differences between yield metrics. The conversation sheds light on navigating bond investments amidst rate fluctuations and the implications of higher rates on fixed income investors.
35:49

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Podcast summary created with Snipd AI

Quick takeaways

  • Duration measures price sensitivity to interest rate changes in bonds, longer durations are more impacted by fluctuations.
  • 30-day SEC yield in bond funds reflects income distributed to investors in the past month.

Deep dives

Explaining Duration and Yield in Bonds

Duration in bonds is not the same as maturity, but rather it measures price sensitivity to interest rate changes. Bonds with longer durations are more impacted by rate fluctuations. The concept of duration can be challenging to grasp, but it essentially signifies the anticipated cash flow relative to the bond's future value. Additionally, the 30-day SEC yield in bond funds reflects the income actually distributed to investors in the past month.

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