Do you want to invest in debt mutual funds but are confused by the term modified duration? If so, you are not alone. What is Modified Duration in Debt Mutual Funds?
Modified duration is one of the most important concepts to understand before you choose a debt fund for your portfolio. In this blog post, I will explain what modified duration is, how it affects the value and risk of debt funds, and how you can use it to select the best debt fund for your goals. I have been writing about the basics of Debt Mutual Funds for the past few months. You can find all those articles here “Debt Mutual Funds Basics“.
In this post, I dwell on the concept of Modified Duration. You may be aware of the interest rate risk of debt mutual funds. If you are unaware, then I suggest you to refer to my earlier post “Part 3 – Debt Mutual Funds Basics“.
What is Modified Duration in Debt Mutual Funds?
Modified duration of debt mutual funds is a measure of how sensitive the value of a fund is to changes…