Short duration or short-term stocks are returning near-term cash to their owners while long duration stocks are expected to return cash, or the greater part of it, later, such as growth, early stage, or not-profitable stocks.
In a similar fashion than bonds, rising interest rates will affect long-term stocks more than the short duration ones as witnessed in the last couple of years. As discount rates adjust, the interest rate risk for short-term stocks, which we may call value stocks, is mitigated by the relative assurance that invested capital should be returned within an acceptable timeframe.
However, these short-term stocks, with the Graham-Dodd value premium embedded in them, bare a higher risk of cash flow disruption than long duration stocks as their cash or returns are expected to come early. Put another way, value investors in the classical sense are being compensated for assuming a higher risk of cash flow disruption. While they fall less than growth stocks when interest rates rise, value stocks are more vulnerable to cashflow shock risks as their imbedded value premium supposedly compensates for such risks.
When rates are expected to rise, the equity portfolio manager might want to reduce the duration of the long portion of the portfolio by (i) selecting value stocks (ii) which are the most immune from cash flow disruption, such as mature companies in defensive sectors generating strong cash flow and high returns priced at an adequate margin of safety.
Many of these so-called quality companies have ceased to innovate in any disruptive way and are now fixated on returning cash to shareholders to comply with the metrics expected from them by investors eager to have their capital returned to them. Such companies have come to operate mostly on sustained or efficiency innovations and are able to free up capital to return to shareholders within a cycle of 12 to 18 months. High returns stocks falling into that category are by their very nature low duration securities.