Investors ill-informed about the interest rate risk to bond funds

With investors exiting stocks en masse for the safety of bond funds, it's disconcerting to learn that they have no idea what they're getting into. In an Investor Literacy Test conducted by the Vanguard Group, the second-largest US mutual fund firm, nearly 70% of the 1,000 randomly selected investors surveyed did not understand the inverse relationship between bond prices and interest rates, according to a press release posted on the company's web site. Startling, huh? Those of you reading this probably roll your eyes every time you read the de rigueur explanation in the daily credit ma...