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An investor in a ladder can increase or decrease the duration as they see fit. A fund has limits...

Exactly! An individual investor makes his/her own choices and presuming rational decision-making will make "good" choices. But an investor in a bond fund isn't making his own decisions, and I am not referring to handing the decision-making over to the fund manager (who is more experienced and savvy than the individual bond owner). I am referring to the fact that the fund manager (of an open-ended fund) is "forced" to make decisions based on the flow of funds. If lots of money is invested when bond aren't at attractive prices, the manager is forced to buy bonds at unattractive prices. If lots of redemptions occur when prices are low, the manager is forced to sell when prices are low. Not so for the [rational] individual bond owner.
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