SWBDX and the like vs. CD's

[oldcrowcall]

I have held SWBDX in my portfolio for the fixed income portion for a few years. I have the dividends reinvested. It has just laid there, at the same total value, like an inert ballast ,  for at least the last 2 years. So I guess the income reivested has been offset by principal value decline. Wouldn't one be better off with CDs? At least you you get the income and the principal stays the same.  What am I not getting?

 

[brewer12345]

You got it. In a rising rate environment, you lose principal on bond funds. Of course, it goes the other way if rates drop. If you think rates will fall in the future, maybe it makes sense to stick with the fund. Otherwise, you could do a lot worse than a 5.75% Pen Fed 5 year CD.