FYI: When investing in equities, mutual funds are generally the preferred choice over individual securities because of the need to broadly diversify and to minimize idiosyncratic (and therefore uncompensated) risk. On the other hand, with fixed income investments that do not take on credit risk (such as Treasury securities), there is no need to diversify credit risk. Thus, investors can build individual portfolios of securities, avoiding a fund’s expense ratio. And for taxable bonds, FDIC-insured CDs typically offer considerably higher yields than the similar risk-free Treasury securities of the same maturity (which can also be purchased individually, avoiding a fund’s expense ratio.)
Regards,
Ted
https://www.advisorperspectives.com/articles/2019/07/19/which-is-better-mutual-funds-or-cds
