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|Subject: Re: Bond Ladder vs Bond Fund Ladder||Date: 8/7/2013 11:56 AM|
|Author: jackcrow||Number: 35049 of 35340|
Just playing devils advocate.
By switching to funds over bonds you are exchanging capital risk for floating yield risk.
The yield advantage is a statistical advantage, a patient and disciplined bond picker should be able to meet or beat that difference.
"Greater Diversification" is over rated. If you have a million dollars in bonds at work invested in 1 - 5 bond lots and haven't jumped head first into only two sectors you have plenty of diversity.
Liquidity depends on the issues you are holding, you may be just as liquid or not. Some bond investors are more concerned with liquidity then others.
If one has concerns about rising interest rates relative to their ladder and wishes to do something active about it there are two things one can do. A)shorten the ladder; take advantage of current high prices and cash out some longer dated bonds, B)manage the account with a higher portion of cash so that one can take advantage of the higher rates as they come.
just some thoughts
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