Duration and credit quality together describe a bond style. It is important to understand these metrics, as they represent the two most important risk factors for bonds.
To access your portfolio bond style analysis, select Allocation->Bond Style, as shown below:
Duration measures the sensitivity to interest rates. Please refer to the Appendix for an explanation of duration. In Kwanti's Allocation->Bond Style view, the duration for each position appears as shown below:
The portfolio average duration is a weighted sum of the position's durations. The weight factor takes into account the weight of the position and the amount of bonds in the position (for funds that have less than 100% bond allocation). Positions with unknown duration are excluded from the calculation.
Credit quality indicates the probability of default. It ranges from AAA (high quality) to B (low quality). Please refer to the Appendix for an explanation of these terms. In Kwanti's Allocation->Bond Style view, the credit quality for each position appears as shown below:
The portfolio average credit quality is a weighted sum of the position's credit quality. The weight factor takes into account the weight of the position and the amount of bonds in the position (for funds that have less than 100% bond allocation). Positions with no credit quality rating are excluded from the calculation.