FYI: But there’s a significant knowledge gap between the two types of investments for the everyday trader. Stocks are far more popular with myriad platforms available for trading and learning, while bonds seem to get relegated to the sidelines, almost as an afterthought.
As such, when it comes to adding bond exposure to their portfolio, investors are often unable to differentiate between the benefits and risks of using bonds or bond funds. Although both involve bonds, the similarities end there. Unlike stocks and stock mutual funds, bond and bond funds are completely different animals. Depending on the needs of an investment portfolio and the time an investor has to dedicate to it, either choice could be best.
Blindly adding an investment to a portfolio just because it fulfills the conservative bond requirement is a quick path to higher risks and larger-than-expected volatility and/or losses. They both behave very differently to interest rate changes and respond differently to market conditions so understanding the details of both will help investors make an informed decision about which one to invest in.
Regards,
Ted
http://mutualfunds.com/education/bonds-versus-bond-funds/
