South Florida Arbitration & Litigation Lawyer Blog
Short-Term Bond and Common Stock Investment Loss – South Florida FINRA Arbitration and Litigation Attorney:
A Short-Term Bond Fund is a bond mutual fund which invests in short-to-intermediate term bonds. Such bonds typically mature in 3 to 5 years and pay higher yields than the shortest maturity bonds of 1 year or less, which are held by ultra–short term bond funds. Short-term bond funds also usually pay higher yields than money market mutual funds, which buy short-term commercial paper maturing in 90 days or less. Short-term bond funds, while yielding less than long-terms bond funds, are also much less volatile, meaning that their value falls less when interest rates rise and rises less when interest rates fall.
Please keep in mind that the above information is being provided for educational purposes only. However, the focus on this article, especially based on the fact that it appears that higher interest rates are on the horizon, is that the duration of the bond and rising interest rates probably will have an adverse effect on the value of the bond. Notwithstanding the foregoing, this post is not designed to be complete in all material respects. Thus it should not be relied upon as providing legal or investment advice. If you have any questions concerning the contents of this post, please contact a qualified professional.
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