No. of Recommendations: 1
In a nutshell, even a bond mutual fund has risks. Just look at a whole bunch of them that tanked 40% or more in 2008. But putting a black swan or market crash aside, there is also the cyclical risk of interest rates and how they impact the mutual fund price shares. Right now is a great example. Bonds of all credit quality classes have come along way and at some point will pull back.

Something to consider might be hand picking your own bond; other than default, you can sail smoothly through any market condition or scenario.

A great example of a potential investment grade candidate to consider would be the Sara Lee bonds I pointed out in another thread. 21 years til redemption with a ytm in the 6.6% range if you bought today.

But whatever you decide to do, just remember that past performance is no indication of what will happen in the future.
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