No. of Recommendations: 3
Realize that interest rates will have to return to where they were when you bought them for the NAV to return.

And this is true only if the only risk factor is interest rate risk. What we found with the Total Bond Index was that refinancing risk has drained about 1% of return per year, which would mean interest rates would have to be lower when you sold the fund than on the average when you bought it. For a Treasury fund, however, interest rate risk would be the only factor (assuming the US Treasury doesn't implode). I think for the Intermediate Index, with no mortgage bonds, interest rate risk would be the main factor, with some default risk considerations. (When we looked at the numbers, default risk on investment grade funds was fairly minimal compared to interest rate risk.)
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