Higher interest rates ahead? Bond fund investors need to plan for multiple scenarios
Abstract: With interest rates near historic lows for an extended time, speculation has mounted about when they might head higher. Interest rates and bond prices tend to move in opposite directions, so if rates rise, bond prices likely will fall. But, as this article explains, there’s no reason for bond holders to panic. Even in a rising interest rate environment, a portfolio manager can reinvest interest payments in higher-yielding bonds, and a number of diversification options are also available. A sidebar explains what causes changes in interest rates.