Originally Posted by
dennis thompson
If interest rates continue to go up bond funds will continue to go down, using a simple example ,if you own a bond paying say 3% and rates go to 4% on similar bonds ,your bond will go down to yield 4%. It can be more complicated than this depending on maturity, risk,etc, but that’s basically how it works.
An individual bond held to maturity will however, pay out the promised, usually $1,000, amount.( assuming they don’t go bankrupt)
A bond fund holding multiple bonds will react in the same way,but there is no “ maturity” on a fund since they will usually hold many bonds of different yields and maturities.