The Federal Reserve's aggressive interest-rate increases brought bond investors a silver lining: significantly higher yields. However, with recent signs that the Federal Reserve may be pausing its rate hikes, investors are left wondering if bond funds are still a good investment in the current economic climate.
Bond yields have shot higher since March 2022, when the Federal Reserve began raising interest rates. The 10-year Treasury yield has soared, leading to increased interest in bond funds as a way to potentially capitalize on higher yields.
When you invest in a total bond market index fund, you are adding exposure to the entire U.S. bond market to your portfolio. This can provide diversification and potentially reduce risk in your investment portfolio.
As interest rates rose over the past few years, bond prices plummeted, making high-quality bonds more attractive, our columnist says. However, with a potential pause in rate hikes on the horizon, the bond market may experience some fluctuations in the near future.
Here are some of the best index funds you can buy today, according to experts. These funds may provide a way for investors to gain exposure to the bond market while potentially benefiting from any future increases in bond yields.
Editor's Note: APYs listed in this article are up-to-date as of the time of publication. They may fluctuate (up or down) as the Fed rate decisions impact bond yields.
The fixed-income market has been turned on its head in recent years, but there are still opportunities for those looking to buy bonds again. Investors should carefully consider their risk tolerance and investment goals before diving into the bond market.
Discover the best high-yield bond funds, including mutual funds, and expert tips on how to select them for your portfolio. High-yield bond funds can offer attractive returns, but they also come with higher risk that investors should be aware of.
