Funds that focus on residential mortgage-backed securities recorded their biggest quarterly loss in nearly two decades as investors fled out of bonds over the past six weeks on fears that less stimulus from the Federal Reserve will push up interest rates, Reuters reports.

The 62 open-end, close-end and exchange-traded funds which specialize in MBS and tracked by Lipper - a unit of Thomson Reuters - on average posted a 1.87% loss in the second quarter, the steepest decline since the first quarter of 1994, Lipper said.