QUOTE(cheahcw2003 @ Dec 27 2015, 11:41 AM)
a) I wonder if it is still advisable to invest in this fund (or any other bond fund) since the interest rate is escalating. The theory depicts that interest rate and bond performance has an invert relationship.
I am talking about bond fund in general...
Let's say a company issued bond at par value of US$1000, with coupon rate of 5%. That means every year, it pays interest of $50/unit.
With Fed rate hike, the market value of the bond may drop. Let's say before that it was traded at $1000. Now the market price has dropped to $980. The issuer will still pay interest at $50, not $49.
And, as maturity date draws close, the market price will move towards its par value, which is $1000.
All these, provided that there is no DEFAULT.
Rate hike does increase the possibility of default. However, from what I know, bond default rate is low, even among junk bonds.
OK, will all those said, you make your own judgment

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My suggestion is your forego the RHB Islamic Bond Fund, but you can still invest in other bond funds.
This post has been edited by river.sand: Dec 27 2015, 02:48 PM