Mixed signals from bond fund managers; what should mutual fund investors do

Mutual fund managers seem to have starkly divergent views on the outlook for the bond market. The disparate positioning of various dynamic bond funds, which are considered a proxy for the fund house’s fixed income stance, indicates that fund managers are not aligned on interest rates. The positioning of dynamic bond funds is best explained by the portfolio duration or average maturity. Both reflect the sensitivity of the portfolio to interest rate changes. Bond prices and interest rates are inversely related.

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