Motley Fool's Lawrence Weinman says investors may want to move on from GNMA bond mutual funds to other alternatives. Why? The answer to almost every reason behind anything investors have been told to do in the past two months: Rising rates.

As interest rates have fallen in recent history, the number of prepayments have been low as homeowners and mortgage borrowers didn't have the equity to refinance, Weinman explains. The funds keep the higher interest rate mortgages, and voila, investors had great returns. But the rising rate environment is beginning to hurt these funds, Motley Fool's charts show.

Weinman suggests investors start shortening the duration of their bond holdings as rates continue to rise.

This is in part, he writes, because many institutions aren't allowed to hold mortgage-backed debt, while other investors have simply become wary of the debt category. To read more, click here.  

Edited by: Casey Quinlan


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