Rising Rates Are Not Likely To Trash Your Bond Returns
Portfolio Strategy, ETF investing, Fund Holdings, fund research
Bond fund/ETF investors, and even most investment professionals, believe that rising Fed-controlled interest rates will likely sink your bond funds.
In this article, I show historical data that rising Fed Fund rates are not typically associated with falling bond fund NAVs.
Since bond prices may not suffer as investors tend to think, this suggests some strategy considerations for holders of funds such as VBTLX and BND.
Federal Reserve Building in Washington DC
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The news is full of articles these days that the Federal Reserve Board, the government entity charged with setting short-term interest rates, is close to reducing its support for the economy, and subsequently, likely to raise interest rates in the not too distant future. While such a raise in rates (or a series of ones) is not going to be immediate, it now seems many of the Fed's prominent economists are projecting an initial raise as early as mid-2022 with additional rises forecast to follow.**https://www.google.com/amp/s/seekingalpha.com/amp/article/4458480-rising-rates-are-not-likely-to-trash-your-bond-returns