This is a good piece on what happens to bonds when rates rise. And rates will very likely rise more when the Fed completes all of its tapering and ends its support of low interest rates.
As the piece points out, longer term bonds fair the worst in rising interest rate scenarios, and long term bonds are typical of most bond funds, so consider reducing your exposure to long term bond funds. So what is a fixed income/bond investor to do? This piece specifically mentioned floating rate bonds, and they are clearly in play right now. But also consider alternative income producing investments like dividend stocks, REITs, and MLPs (although not all MLPs are created equally).
“Volvo, Video, Velcro: I came, I saw, I stuck around.”
Assistant State Treasurer
Chief Investment Officer
State of Louisiana
Department of the Treasury