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One would think that a bond, any bond that is kept to maturity would redeem at par and therefore theoretically could never lose money.

The problem with mutual funds, including govt bond funds, that if there is a sharp movement in the value of an investment and a lot of investors decide to redeem , this causes the managers of the mutual fund to sell assets earlier than they might, locking in losses in order to cover the cash redemption requirements of the funds.
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