Take a look at a bond fund’s duration. A rule of thumb is that a bond fund’s NAV will go up and down by the duration x interest rate change. So, if interest rates jump by 2%, a fund with a duration of 5 years will drop by 10%. And vice versa if interest rates drop by 2%.
A MM’s NAV stays at $1 no matter what interest rates do.
Investors would be foolish to hold bond funds if MM’s always had interest rates equal or better than bond funds. And they don’t. Investors usually get higher return with longer duration bond funds.
A MM’s NAV stays at $1 no matter what interest rates do.
Investors would be foolish to hold bond funds if MM’s always had interest rates equal or better than bond funds. And they don’t. Investors usually get higher return with longer duration bond funds.
Statistics: Posted by rkhusky — Fri Sep 19, 2025 1:32 pm — Replies 4 — Views 243