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|Subject: What's Safer: indiv bonds or bond funds?||Date: 3/1/2014 10:53 AM|
|Author: loveoldcars||Number: 35214 of 35400|
Interesting article addressing the age-old argument!
Contrary to popular belief, both bond funds and laddered individual bond portfolios have identical risk.
A common misconception is that bond funds are more exposed to interest-rate risk than laddered individual bond portfolios. The truth is that they have identical exposure.
The logic for the standard view basically starts and ends with the observation that an investor can hold individual bonds to maturity while bond funds don't necessarily hold all bonds until they mature. Most bond fund managers trade their assets periodically.
rk (hold indiv. bonds, and bond funds)
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