Stocks Bonds Cash and Near Cash Cash and near cash refer to instruments generally maturing with 6 months or less and which have little or no sensitivity to interest rate increases or decreases. We continue to recommend barbelling the portfolio between old and new economy names. We believe the recent price increase in bonds leaves them overbought in the government sector. Small caps exhibit different performance characteristics and can have long periods of underperformance and outperformance. Maturities and Duration Credit Quality allocations Foreign Currency Risk, if any.
Maturity refers to when the final payment of principal is due.
In effect, duration refers to the number of years half of the principal is outstanding. Duration determines the degree of sensitivity to interest rate changes. The longer the duration, the greater the sensitivity of principal to interest increases or decreases. In other words, the price of publicly traded bonds adjusts up or down based on interest increases or decreases and the duration of the bond. Interest rates up, bond prices down.