Rising interest rates also mean that investors could see fees creep up, effectively neutralizing much of the yield that makes money-market funds attractive. As a result, “ultrashort-duration” bond funds and exchange-traded funds are becoming more popular. Ultrashort-duration bonds are bonds that are due to come to maturity in less than two years. As with more-traditional longer-duration bond products, investors can blend several ultrashort-bond products together creating a short-duration portfolio that protects the value of longer-term holdings as rates rise. Still, there are key differences between money-market funds and ultrashort-bond products.

Source: Wall Street Journal June 05, 2017 02:07 UTC