Short duration bonds
A first step onto the credit ladder, providing the potential for greater returns than cash with less uncertainty than all-duration strategies.
Why invest in short duration bonds?
Less volatile than all-duration bonds
Duration is a vital measure of a bond’s sensitivity to interest rate changes. Bonds with a short duration are less sensitive to interest rate changes. This means short duration strategies could offer exposure to bonds without the higher levels of risk in longer duration strategies.
Step out of cash
Short duration strategies are a way for investors to harness the income potential of bonds, while mitigating the impact of rates or spread volatility. They could provide a bridge between cash holdings and longer-term fixed income investments.
Dynamic allocation
During periods of uncertainty, a dynamic approach to asset class and sector allocation, as well as active management of duration across currencies, could provide the potential to exploit opportunities as they arise, while mitigating rising levels of risk.
Our expertise
Broad offering
Our range encompasses investment grade credit, high-yield, emerging markets, aggregate and responsible strategies. These are backed up by specialist analyst teams as well as teams in local markets that can provide a precise view on issuers from across the globe.
Longstanding experience
We began managing short duration strategies in 2001 with the successful launch of our US short duration high-yield strategy. Since then we have gone on to distinguish ourselves as one of the foremost managers of this asset class across a variety of sectors.
Unified approach
Our short duration strategies follow a common investment philosophy and investment process. It has been designed and refined over the decades to leverage our talented team and extensive resources with the aim of delivering capital growth and risk mitigation for our clients.
Our featured strategies
Carbon transition fixed income
The advantages of short duration with an explicit carbon reduction objective.
Learn more Explore fundGlobal short duration
A short duration strategy that seeks the best opportunities from our global fixed income analysts.
Explore fundOur full range
We have a broad range of short duration bond products that provide a mix of opportunities for investors to grow or diversify their portfolios, or to provide an alternative to cash holdings.
Important information
Marketing communication. For professional investors only.
Past performance or achievement is not indicative of current or future performance. Performance is calculated net of fees unless otherwise stated.
Any views expressed here are those of the author as of the date of publication, based on available information, and subject to change without notice. This material does not constitute investment advice.
Investments are subject to market fluctuations and the risks inherent in investments in securities. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial investment. There is no guarantee that the performance objective will be achieved.
This document is directed only at person(s) who have professional experience in matters relating to investments (“relevant persons”). Any investment or investment activity to which this document relates is available only to and will be engaged in only with Professional Clients as defined in the rules of the Financial Conduct Authority. Any person who is not a relevant person should not act or rely on this document or any of its contents.
Fixed income sub-funds may be exposed to other risks defined below:
CAPITAL LOSS RISK: The value of the investments in Financial Instrument(s) and the returns generated by the described funds may go down as well as up. Investors may not get back the amount they originally invested.
INTEREST RATE RISK: The value of an investment may be affected by interest rate fluctuations. Interest rates may be influenced by several elements or events, such as monetary policy, the discount rate, inflation, etc.
CREDIT RISK: This is the risk that may derive from the rating downgrade of a bond issuer to which the sub-funds are exposed, which may therefore cause the value of the investments to go down. Sub-funds investing in high-yield bonds present a higher than average risk due to the greater fluctuation of their currency or the quality of the issuer.
COUNTERPARTY RISK: This risk relates to the quality or the default of the counterparty with which the Management Company negotiates, in particular involving payment for/delivery of financial instruments and the signing of agreements involving forward financial instruments. This risk is associated with the ability of the counterparty to fulfil its commitments (for example: payment, delivery and reimbursement). This risk also relates to efficient portfolio management techniques and instruments. If counterparty does not live up to its contractual obligations, it may affect investor returns.
MMFs ARE NOT GUARANTEED INVESTMENTS. An investment in MMFs is different from an investment in deposits, there is a risk that the principal invested in an MMF is capable of fluctuation. The MMF does not rely on external support for guaranteeing the liquidity of the MMF or stabilising the NAV per unit or share. The risk of loss of the principal is to be borne by the investor.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) INVESTMENT RISK: The lack of common or harmonized definitions and labels integrating ESG and sustainability criteria at EU level may result in different approaches by managers when setting ESG objectives. This also means that it may be difficult to compare strategies integrating ESG and sustainability criteria to the extent that the selection and weightings applied to select investments may be based on metrics that may share the same name but have different underlying meanings. In evaluating a security based on the ESG and sustainability criteria, the Investment Manager may also use data sources provided by external ESG research providers. Given the evolving nature of ESG, these data sources may for the time being be incomplete, inaccurate or unavailable. Applying responsible business conduct standards in the investment process may lead to the exclusion of securities of certain issuers. Consequently, the Sub-Fund’s performance may at times be better or worse than the performance of relatable funds that do not apply such standards.
This is not an exhaustive list of risks. For a full description of risks associated with each fund, please consult a client relationship manager or the global BNP Paribas Asset Management website: staging.bnpparibas-am.co.uk.