Diversification: A Reason to Stay the Course With Your High-Quality Bond Fund
These funds prove their worth when markets turn rocky.
We often get questions about how investors should think about allocating their bond portfolios given that yields might be on the rise. Such fears are understandable. Rising yields mean losses for bond portfolios, at least in the short run, which is unsettling for those looking to meet a near-term goal.
Still, it's important not to lose sight of the important diversification benefits that bonds can offer. After all, none of us has a crystal ball. If the economy continues to chug along and inflationary pressures build, we could well see continued pressure on yields and losses for bond funds.
Sarah Bush has a position in the following securities mentioned above: VBTIX. Find out about Morningstar’s editorial policies.