With a bond fund you also have continuing expenses every year with individual bonds you do not. You also need to read a bond funds prospect's. The SEC allows bond funds to have up to 20% of it's assets in cash or even junk bonds. So you could have a treasury fund you think is safe but 20% of it is invested in junk bonds to increase it's looks (yield). When you purchase a bond directly you will get 100% of your investment back at maturity. If you cash in your money in a bond fund you may get more or less of your principal back depending on the value of the fund at that time. Bond funds in a taxable account can also present problems for management of taxes. You have no control over when they buy and sell. So if they sell a bonds at a profit to look good on paper which in many cases is done in December you will than have to include an unexpected capital gains on your taxes.
I will agree that GNMAs and Junk bonds are best bought in a bond fund. As far as call provisions in bonds one of the first questions you should ask is the bond callable. In many cases bonds with call dates will have a higher interest rate on them so don't go after the rate unless you know if it is callable. I will buy callable bonds but only at a discount.
I will agree that GNMAs and Junk bonds are best bought in a bond fund. As far as call provisions in bonds one of the first questions you should ask is the bond callable. In many cases bonds with call dates will have a higher interest rate on them so don't go after the rate unless you know if it is callable. I will buy callable bonds but only at a discount.