Also, mortgages have a duration (a calculation of the time it takes to get paid back) that is a variable, hypothetical duration that varies with prepayment speeds, so a short duration mortgage portfolio is not protection against a sudden increase in interest rates, because if interest rates rise the duration will rise which hurts the value of the bond.

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Shortening the duration of your bond portfolio means you receive cash sooner than longer duration bonds and therefore you can reinvest that cash sooner at higher interest rates in an inflationary environment.

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Conversely, in a decreasing interest rate environment you may also want to consider extending the duration of your portfolio.

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But what that says to you, the fact that the portfolio could theoretically be negative duration, means that it could actually profit from a rising interest-rate environment if positioned appropriately and timed appropriately.

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For example, we could increase the duration of our investment portfolio, we could go out and buy a lot of securities that have good short-term yield but have higher credit risk.

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Managers with the ability to adapt to change, with the ability to manage portfolio risk factors such as yield, duration, allocation weighting, and credit quality, can find success in multiple environments.

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You also ought to have flexibility in your duration, the risk in the portfolio, and flexible bond investing requires that.

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That they were essentially long on duration and it was interest rates that drove that portfolio, not other decisions that could be made in a portfolio, or other investments that could be made in a portfolio.

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