Felix Salmon (Reuters) puts the recent sell-off in bonds and the impact on bond funds rather nicely in this post.
All the bond funds have seen a bit of a dip in recent weeks, but it’s the kind of move they’ve seen many times in the past, and it’s not the kind of move which is likely to cause an individual investor to panic. The main thing you learn from looking at this chart, indeed, is not that we’re in the midst of a historic bond-market selloff, but rather just that bond funds in general are pretty good at doing what they’re meant to do — which is to broadly retain their value over time, and with any luck go up over the long term, with reasonably low volatility.
Well said! Read the whole post at the link above.
Note that this is pretty much true of Indian funds as well.