Interest rates have been falling for over 30 years. As interest rates fall, bond prices increase as previously issued rates become more valuable. There is an inverse relationship between interest rates and bond prices.
This 30-year up trend in bond prices has lulled some investors into thinking that bond prices are only stable or go up, not remembering that they can also drop a lot if interest rates rise.
In order to protect your portfolio from a sharp drop in bond prices, it is safer to own short-term bond funds, 5-years or less. Blackrock just issued a new fund last week where the bonds will mature in only a year or less, and 80% of them are investment grade. You may want to evaluate this fund for your portfolio; it is an ETF with the ticker symbol, “NEAR.”
Will interest rates rise? Someday, but before that time arrives you should have some kind of plan to protect yourself from rising interest rates on your longer-term bonds.