You are comparing to the Fed funds rate, which is a different thing. Each bond held by the fund will respond to interest rate changes for the specific type of bond, and its value will change accordingly.@gjohn,
You are being only told half the story above. Bond funds can fall even if the rates are falling, and can rise even if the rates are rising. It is not necessarily true that if the rates rise the bond funds will fall, and vice versa.
The key to understanding here is that bond funds ANTICIPATE the rise or fall of interest rates MONTHS in advance.
Statistics: Posted by Northern Flicker — Tue Oct 22, 2024 10:57 pm — Replies 31 — Views 2004