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August 3, 2015

Worried bond fund managers hold more cash

  • The concerns mean it's important to make sure you're in the right type of bond fund.
    • By STAN CHOE
    AP Business Writer

    NEW YORK — Imagine the bond market as a crowded swimming pool, except it's one where the water level drops whenever someone tries to leave. By the time you attempt to get out, you're stuck at the bottom, unable to exit because the ladder is 10 feet above your head.

    Now you know what the bond market is worried about. Bond fund managers are increasingly talking about the market's “liquidity,” or how easy it is to buy and sell bonds. Concerns are rising that the day is approaching when everyone will rush for the exits at once and drain the market's liquidity, perhaps after the Federal Reserve begins raising interest rates.


     
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