There is a structural fault line brewing in the financial markets that could lead to a crash in bond funds, according to IndexUniverse.

The conclusion lays in the fact that bond mutual fund assets have risen dramatically in recent years, but that bond market-making banks have been trimming their own holdings way back at the same time.

"This kind of behavior places an automatic strain on the relationship between bond funds — which promise instant liquidity and continuous pricing — and the underlying bond asset class," IndexUniverse asserted.

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The assets of U.S. mutual funds invested in investment grade debt and high-yield debt have tripled since 2008, from $300 billion to $900 billion, according to a Citi credit product estimate. But the banks that act as intermediaries between bond buyers and sellers have slashed their holdings by 76 percent — from $286 billion to $69 billion.

IndexUniverse said attempts to organize bond trading into an exchange model have not been fulfilled, and the market still relies on a dealer-centric transaction model.

At the same time, dealers' capacity to carry bonds on their books has diminished since 2008 because of restrictions on proprietary trading and higher regulatory fees.

IndexUniverse warned: "Bond dealing is fragile and rests on trust. . . . Dealers are under no obligation to buy or sell bonds they don't want and investors fear that prices could move against them."

Larry Tabb and Will Rhode of research and strategic advisory firm TABB Group, authors of a recent study on U.S. corporate bond trading in 2013, said the bond market's underpinnings appear not to be very deep.

"The low levels of dealer capital would probably be fine if all bond inventories were held by individual investors, who are less likely to liquidate their holdings in the event of a rate rise," they wrote.

"However, retail investors' bond holdings are increasingly sitting in mutual funds and ETFs. . . . What concerns dealers and asset managers alike is the fact that an interest rate rise causes investors to liquidate fixed income funds . . . causing a flood of bonds to hit the market at a time when there is little dealer liquidity to absorb the shock."

The United States experienced a potential foretaste of bond market chaos in June when the Federal Reserve suggested it might raise rates. Rates backed up quickly, and the central bank withdrew its hints.

According to IndexUniverse, the risk of massive bond fund runs is still present. "I know first-hand that not only the buy-side, but the sell-side is scared," said Tabb.

In her Senate Banking Committee testimony Thursday, Janet Yellen, the Fed chair nominee, suggested she would continue the Fed's ultra-stimulative monetary policies that currently have the central bank buying up $85 billion monthly in government bonds, Bloomberg reported.

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