Finance, Forex and Investments

Is it good or bad news for monetary fund if central bank raises the interest rate?

I mean generally speaking. Plus, in US market what's the general return rate for a monetary fund? Thanks.

Public Comments

1. If the group of assets this fund invests in have a rise in interest rates, initially the fund will lose money on what it owns, but long term it needs to have bought higher rate assets. Long term it is to their benefit. If this is a money marklet fund or very short term bond, central bank rates rising is a clear winner because they sill lose almost nothing and start gaining right away. Long term bonds are baddly hit when long term bond yields rise. The bonds they own lose a lot of value. But everything they buy from here forward is in gravy. THey will then recover the original loss if and when interest rates settle down again.