bmcgonig
Thinks s/he gets paid by the post
- Joined
- Aug 31, 2009
- Messages
- 1,578
We've been through this many times but yet an interesting post in the WSJ today with a quote from Bernstein:
Are Individual Bonds Really Better Than Funds? - Total Return - WSJ
"It’s true; when rates rise, the price of your mutual fund falls, but from that point forward you’re getting the market rate of interest. With individual bonds, you won’t take a loss at maturity, but until then you have to bear the pain of a crummy coupon. With the bond fund, you’re ripping the bandage off quickly; with the individual bond, you’re doing it slowly. The end result is precisely the same."
Are Individual Bonds Really Better Than Funds? - Total Return - WSJ
"It’s true; when rates rise, the price of your mutual fund falls, but from that point forward you’re getting the market rate of interest. With individual bonds, you won’t take a loss at maturity, but until then you have to bear the pain of a crummy coupon. With the bond fund, you’re ripping the bandage off quickly; with the individual bond, you’re doing it slowly. The end result is precisely the same."