Markets & Economy

 

Bond investing in a rising-rate environment

August 14, 2013

An episode from Vanguard's Investment Commentary podcast series

Brian ScottIn this podcast, Brian Scott, a senior investment strategist in Vanguard's Investment Strategy Group, discusses concerns about the bond market and explains why we believe bonds should play a crucial diversification role in your portfolio.

Notes:

  • All investments are subject to risk, including the possible loss of the money you may invest.
  • Past performance is not a guarantee of future results.
  • The performance of an index is not an exact representation of any particular investment as you cannot invest directly in an index.
  • In a diversified portfolio, gains from some investments may help offset losses from others. However, diversification does not ensure a profit or protect against a loss.
  • Bond funds are subject to interest rate risk, which is the chance bond prices overall will decline because of rising interest rates, and credit risk, which is the chance a bond issuer will fail to pay interest and principal in a timely manner or that negative perceptions of the issuer's ability to make such payments will cause the price of that bond to decline.
  • While U.S. Treasury or government agency securities provide substantial protection against credit risk, they do not protect investors against price changes due to changing interest rates. While the market values of government securities are not guaranteed and may fluctuate, these securities are guaranteed as to the timely payment of principal and interest.
  • For more information about Vanguard funds, visit Funds, Stocks & ETFs or call 877-662-7447 to obtain a prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.