Quote:
Originally Posted by Taj44
Also, because the bond fund is making investments on a continual basis, the yield curve of the fund will be smoother than laddered bond holdings of the individual investor. The bond fund will have a much more diversified group of holdings because of its larger pool of investable assets. Bond funds also typically pay significantly lower bid–ask spreads than individual investors i.e. individual investors pay higher transaction costs.
|
Absolutely agree, I have several different bond funds. Intermediate some long term some govt. ect. However, with the ladder you know you will have par value when a bond comes due. Interest rates will be going up. When ? who knows but when they do, bond fund values will go down as well as individual bonds. Of course, that's when you want your money. My strategy now is to slowly convert mututal funds to bond funds. I do some every month.