1 Smart Strategy to Avoid a Bond Market Massacre

Even though stocks have performed well lately, the bond market has performed horribly over the past month, with interest rates on the rise and prices falling. The iShares Core Bond Market ETF (NYSEMKT: AGG  ) has lost 2% of its value in just the past month, and other bond ETFs have done even worse. But one part of the bond market has done exactly what it was designed to do: hold up well even in a rising-rate environment.

In the following video, Fool markets analyst Mike Klesta talks with Fool contributor Dan Caplinger about this special bond investment and why it has outperformed its peers lately. As Dan explains, unique features on these types of bonds make them resistant to interest rate changes, and investors actually benefit when rates rise. Dan concludes by sharing three ways you can invest in these bonds. (NYSEMKT: FLTR  )

Blue-chip dividend stocks have been a good bond alternative for a long time now, and although they have more risk, they're still worth a look. If you're searching for some long-term investing ideas, you're invited to check out The Motley Fool's brand-new special report, "The 3 Dow Stocks Dividend Investors Need." It's absolutely free, so simply click here now and get your copy today.


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  • Report this Comment On June 09, 2013, at 8:16 PM, BayAreaBill1 wrote:

    The Fool is full of BS commentators trying to make money from their BS recommendations. Don't believe them. I'll tell you the tried and true way to make money from the bond markets at no cost to you. Just wait for a burst of inflation and for the Fed to raise interest rates to counter inflation. As soon as US bond rates peak (the Fed will tell you when in the FOMC minutes), immediately invest in US zero coupon bond funds with 15 to 20 year maturities. I've made a fortune over they years in portfolio playing this simple game.

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