After 11 interest-rate increases by the Federal Reserve since the start of 2022, Fed policy has shifted. The Federal Reserve has cut interest rates twice in 2024, with many market watchers expecting a cut in December, too. As a result, investors may think it’s time to go further out on the yield curve and extend their durations, possibly abandoning short-term bonds in favor of longer-term fare.
Morningstar’s chief research and investment officer, Dan Kemp, explains in his 2025 Investment Outlook: “Should our federal-funds rate forecast play out, investors would benefit by holding longer-term fixed-income bonds to maintain higher income levels.”
Is a Short-Term Bond Fund a Good Investment?
Morningstar Director of Personal Finance and Retirement Planning Christine Benz says whether or not to own a short-term bond fund should depend on your time horizon and when you need to tap into the money, not on what’s happening in the bond…
