Plan advisors are likely to have their hands full very soon.
Either they'll find themselves spending a lot of time educating plan participants on the dangers — yes, that's right, dangers — bond funds can introduce into their retirement plans, or they're liable to find themselves facing some very disgruntled employees, and even retirees, who loaded up on the funds to minimize risk as they got closer to retirement or relied on them to provide income during retirement.
Why? Two main reasons: First, a rise in interest rates in a recovering economy, which, when it occurs, will drive down the prices of existing bonds as newer-issue bonds offer coupons with greater rates of return. The longer the term of the existing bond, the more magnified that part of the problem becomes.
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