One of the biggest challenges for investors is deciding if bond funds are even necessary in an environment of rising rates. If we’re talking about Vanguard funds, there are many Vanguard bonds funds to buy now, but a few that should be sidestepped.
Although financial media have been warning about the effects of higher interest rates on investments for years, with only minor, short-term price declines in the aggregate for bonds, the time for making moves in the fixed-income portion of your portfolio is fast approaching.
With unemployment rates falling, corporate profits rising and new records on major stock market indices coming almost daily, the Federal Reserve increasingly has more reason to tighten policy. Many investors know that higher interest rates generally mean lower bond prices, but it’s not common knowledge which bond funds are best for rising interest rates and which bond funds are worst.
With this in mind, here are the four best Vanguard bond funds to buy for higher rates and three to avoid.