Bond Investing

Maintaining a long-term perspective

If the outlook for rising interest rates has caused you some concern lately – you are not alone.  However, while rising interest rates may cause the bond market to decline in the short-term, it’s important to keep a long-term perspective and remember that interest rate movements are not an unusual occurrence.  Furthermore, since no one can predict how high interest rates may rise from their current levels, and because there is always the possibility they may retreat, making sudden, sweeping changes to your bond portfolio may be costly and unnecessary.

The impact of rising interest rates on bonds

Bond prices and interest rates have an inverse relationship.  When interest rates go up, bond prices go down, and vice-versa.  Why?  In periods of rising interest rates, investors can buy newly-issued, higher-yielding bonds, making previously-issued, lower-yielding bonds less attractive.  The reverse is true when interest rates decline. Since interest rates move in both directions, staying invested (instead of trying to time market movements) may be your best defense.  However, if modest adjustments are necessary, re-allocating a portion of your bond portfolio to higher-quality, shorter-term bonds may help you weather tougher market conditions.  Learn more>>>

Bonds play an integral role in most any investment strategy

Don't lose sight of your original investment goals.  While the bond market may fluctuate, the reasons for investing in bonds – income and/or diversification – remain constant.

Bonds offer the potential for regular income

While money markets pursue a constant $1 per share price and certificates of deposit (CDs) offer certain protections against loss of principal, bonds – in exchange for higher volatility – have historically offered higher yields.  For that reason, investors in pursuit of a steady income stream often look to bonds for the higher income potential they may provide.  Learn more>>>

Bonds can help diversify your portfolio and may help reduce volatility

In addition to providing regular income, bonds are an important component in any well-diversified portfolio.  Because bonds are typically less volatile and often respond differently to various market climates than stocks, blending stocks and bonds together in one portfolio may help you reach your long-term investment return objectives while lowering your overall portfolio volatility.  Learn more>>>

Bond funds vs. bonds

Investors who like the advantages of bonds may find bond funds even more attractive.  Unlike individual bonds, bond funds offer professional management, instant diversification, low investment minimums and liquidity.  Learn more>>>

To learn more about the types of bond funds offered by Cavanal Hill Funds, go to Cavanal Hill Fixed Income Funds.

Effective January 31, 2011, the Fund's Form N-MFP filings will be made publicly available via the SEC website and can be obtained by clicking the following link: http://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000864508&type=N-MFP&dateb=&count=20&scd=filings


Mutual funds, annuities, and other investments are:



  • not insured or guaranteed by the FDIC or by any other government agency or government sponsored agency of the federal government of any state;
  • not deposits, obligations of, or guaranteed by Cavanal Hill Investment Management, Inc., any affiliated bank or other affiliate
  • subject to investment risks, including possible loss of the principal amount invested


An investor should consider the fund's investment objectives, risks, and charges and expenses carefully before investing or sending money. This and other important information about the investment company can be found in the fund's prospectus. To obtain a prospectus, please call 1-800-762-7085. Please read the prospectus carefully before investing.



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