If calamity breaks out in the bond market, it's largely mom and pop investors who may end up calling the shots when it comes to corporate bonds.
That's because the mutual fund industry controls a hefty 25 percent of the corporate bond market, with foreigners the other big holder with about the same amount. So, when it comes to stomaching losses in the event of a sharp interest rate move, these Main Street and overseas investors may not take it well, and their immediate response could be: Sell!
"Part of the problem is the size of the market, but more importantly is who holds the bigger share of the market. There are 23 investor types ... households, pensions, insurance companies but the real growth has been very concentrated. You see an exponential increase in mutual fund money," said Stephen Antczak, head of U.S. credit strategy at Citigroup.