| We’ve had several people ask this week if they should be worried about their bond portfolios. Yields on 10-year Treasury bonds have risen considerably over the last six months, and you may recall that when bond interest rates go up, bond prices generally go down. So, yes, your bond portfolio could go down in value as interest rates rise. However, the impact of rising rates can be significantly reduced if your bond portfolio is invested carefully. Let me explain with a few graphs: 1. Duration is an important measure of a bond portfolio’s interest-rate risk. Here is what the 6-month returns look like for several highly liquid U.S. Treasury bond funds with varying durations:  You can see the impact of duration clearly. A bond fund with a duration close to 2 years (SHY) gained 0.39%, whereas a bond fund with a duration of over 14 years (TLT) lost -6.26%. In other words, the higher the duration, the greater the sensitivity to rising interest rates. 2. Using the same approach, here are the durations and 6-month returns for the bond funds we use at New Dimensions:  Four of the seven funds have positive returns over the last 6 months, while the worst-performing fund lost -1.75%. We build your total bond portfolio to have a duration between 2.0 and 2.5 years, which significantly reduces the impact of rising interest rates compared to longer-duration bond portfolios. Note – your targeted bond portfolio duration can change as the interest rate environment changes. Unfortunately, the yield on the 10-year Treasury is currently higher than it has been at any time since July 2007, as you can see from the long-term chart below.  Rising interest rates are not only a challenge for bond portfolios. Higher 10-year Treasury yields also tend to put upward pressure on mortgage rates and other borrowing costs for consumers and businesses. We continue to monitor portfolios closely and rebalance between stocks and bonds as needed. Please let us know if you would like to schedule a time to talk about your portfolio or any part of your financial plan that may have changed. |
| Sources: Morningstar Workstation; www.marketwatch.com/investing/bond/tmubmusd10y?countrycode=bx. As of date: 9/11/2026 Past performance does not guarantee future returns. |