Some have increased their exposure in cash, and some, whose charters permit, invested in bonds as well. This is all the exposure you need in bonds. You have paid handsomely in your Social Security for years, and this is essentially a bond fund. Opening additional exposure in bonds will have defeat what you were think you should be doing. But if you think that this is were you need to be because you have determined that your risk level is low, then here's what you need to know.
Bonds run in the opposite direction of interest rates.
So, based on that, every time Alan Greenspan, the Federal Reserve Chairman lowers rates, bond prices go up. But that really reflects only one part of what the fund really is. Bond Funds invest in bonds that invest in debt. You will hear those two terms used when looking at bonds, price and yield, because they tell a great deal about the fund. Debt, I should be quick to add, isn't risk free.