The Bond Bubble: Why Long Term Treasury Investors Should Worry When interest rates rise, bond prices fall a simple yet devastating truth that long term investors have learned all too well in recent years.
This reality has been starkly evident in the performance of the iShares 20+ Year Treasury Bond ETF (TLT), which tracks the U. S. Treasury bonds and has suffered significant losses when interest rates rose.
The TLT's holdings, which include maturities stretching nearly three decades into the future, are particularly vulnerable to rate risk the danger that bond prices will plummet when interest rates rise.