No. of Recommendations: 2
I have read a lot about the problems of bond funds in a rising interest rate environment since they never actually mature.

If you are worried about the 'never mature' part, you might want to look into target date bond funds/ETFs. They are designed to buy bonds that are due in a specific time frame and hold them to maturity, then pay out the proceeds. Here's a link to an article that explains these funds, and some of their pitfalls - the author seems to think that there are more pitfalls than benefits, but he does concede that there might be benefits for some people.

They are relatively new, so there isn't a lot of history to see how they will perform.

But if you don't use bond funds for the fixed income portion of a portfolio, what do you do?

You might also want to look into funds/ETFs that hold preferred stocks. Although not completely 'fixed income', preferreds do provide a known dividend, like a bond does.

AJ
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