How Will Rising Interest Rates Affect My Bond Mutual Funds?

Video Summary: As interest rates rise over the next few months or years, the value of those funds is necessarily going to decline.

Video Transcript:

Rising rates always result in declining values of bonds. So, in particular with bond mutual funds, as interest rates rise over the next few months or the next few years, the value of those funds is necessarily going to decline. It's a real problem in bond funds, because as the bond funds lower in value, people are likely to exit those funds.

Those left holding the funds will effectively be left holding the losers, holding the bad bonds. They're left over that the bond manager was not able to sell. So that is something to be very careful for, with investors is rising interest rates will significantly impact the value of your bond mutual funds.