The book says: Interest rate risk in bonds is the change of bond returns caused by the change of interest rate level, which is the main risk faced by bond investors. Because the market interest rate is an integral part of calculating the discount rate of the present value of bonds, the bond price and the interest rate level move in the opposite direction.

To put it simply, when the interest rate rises, the bond price drops, and at this time, the net value of the fund that mainly invests in the bond drops.

The following only illustrates the relationship between bond price fluctuation and interest rate:

For example, an investor pays 1 yuan to buy a certain one-year bond and holds it for one year.

if the market interest rate is 8%, the market price of the bond is: 1/(1%+8%)=92.59 yuan.

however, if the market interest rate is 1%, then the market price of the bond is: 1/(1%+1%)=9.91 yuan. It is 1.68 yuan less than the above.

This is only the simplest calculation method. From the calculation formula, we can see that the interest rate is in the denominator position in the calculation process, so if the interest rate is raised, the bond price will fall. It is worth reminding that the calculation here is the fluctuation of bond prices, not the fluctuation of the net value of bond funds.

I hope it helps you, and I hope you will forgive me for any mistakes.