https://www.morningstar.com/articles/932740/how-to-become-a-duration-detective
I was reading this article and I found it to be very insightful. Essentially, it illustrates how, unlike equities, you can’t just look at the % of Net Assets that bonds hold within a portfolio to understand its true weight/impact on returns. To get a much greater understanding you have to look at the % of total duration for that bond in the portfolio, since it gives a better look at the inherent risks that each bond holds in its unique interest rate environment.
This points to something even larger and it is that in order to make good comparisons between performances of bond funds, you have to make sure that the funds are even comparable. This involves looking at how they invest across sectors, seeing if the duration of those investments are similar, etc.
All in all, this article is a great read to learn more about the importance of duration.
