Hidden Bond-Fund Dangers Make Stocks Look Relatively Stable
ByBond funds, long considered among the safest investments, are turning out to be a lot riskier than they seem.
Historically, their returns have been far less prone to sudden swings than stock funds. Not this year. In fact, those that buy long-term government and corporate debt have been more volatile relative to equity funds than at any time since the turn of the century, according to Morningstar Inc.
While markets have been buffeted by everything from the prospect of higher U.S. interest rates to the Greek debt crisis and China’s stock meltdown, one reason why returns on long-term bonds have become so unpredictable is that ultra-low yields are making them more sensitive to gains and losses. At the same time, the rise of derivatives has allowed savvy traders to make low-cost bets that can sway the market in a big way…
Hidden Bond-Fund Dangers Make Stocks Look Relatively Stable
