6 Best Mutual Funds for Rising Interest Rates

(Image credit: ©Travelling Light)

published 11 November 2016

The picks below are part of Kiplinger’s Personal Finance’s annual Best List, a roundup of the best values in all the areas we cover — from funds, stocks and ETFs to credit cards and bank accounts to cars, college, kid stuff, phone plans, travel and health. Discover all our Best List picks here.

Vanguard Short-Term Investment-Grade Fund (VFSTX, yield 1.5%), a member of the Kiplinger 25, should weather a rate rise well. Its 2.6-year average duration (a measure of interest-rate sensitivity) implies that the fund’s price would fall by 2.6% if rates were to rise by one percentage point. Vanguard Short-Term Bond ETF (BSY, $81, 1.2%) is an exchange-traded fund that tracks an index of short-term bonds and charges just 0.09% per year for fees. Its average duration is 2.8 years.

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Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.