Bond Funds

The Investment Company Institute (ICI) reports that bond funds accounted for almost 80% of the flows into mutual funds over the past 12 months. Since the stock market bottomed about 13 months ago , one might imagine that much of this came out of stock funds before going into bond funds.

This is both interesting and troubling. During this same timeframe the overall stock market has risen by about 70%. Moreover, interest rates have but one way to go . When rates go up, bond prices fall. A real disconnect it seems on the part of many investors.