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Author: foobar73 Big red star, 1000 posts Feste Award Nominee! Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35351  
Subject: Re: Fixed Income Question Date: 5/7/2003 6:03 PM
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The question (I finally got around to it) is "Is a CD ladder still a better choice than just using a Fund like this". I want maximum return with pretty much NO risk.

From what I can tell, this fund holds some lower grade debt, which means you will have losses if a number of them go bad. I don't know if the "insurance wrapper" you mentioned will cover such losses. Certainly this isn't the same as FDIC insurance, or any other guarantee from the government, though.

In a nutshell, you're getting better returns mainly because you're taking on larger risk. This isn't necessarily a bad thing, especially as I understand the fund has a very short duration and thus limited risk of losses due to rising interest rates, but you should understand that this is not really a "no risk" investment.
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