SCHQ - Estimating The Impact Of Lower Rates On Bond Fund Dividends
2024-02-11 10:07:22 ET
Summary
- It generally takes a few years for changes in Federal Reserve rates to fully impact bond fund dividends.
- Bond funds are still benefitting from prior rate hikes. Perhaps by enough to cancel out any future rate cuts.
- By my estimations, and under current Fed guidance, most bond funds would only start to see declining dividends in 2025, at the earliest.
Changes in Federal Reserve rates, and expectations thereof, lead to changes in newly-issued bonds almost immediately. It generally takes a few years for these to completely impact bond fund dividends, as funds must wait for their existing bond portfolio to mature to access new securities....
Estimating The Impact Of Lower Rates On Bond Fund Dividends