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Fund Spy

8 Incredibly Low-Risk Bond Funds

Risk, schmisk: These mild-mannered funds have exhibited minuscule drawdowns over the past 10 years.

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Low-risk bond funds are a handy thing. If you are putting away money for a near-term expenditure like tuition in a couple of years or a house in three years, low-risk bond funds, along with money markets and certificates of deposit, can serve a valuable purpose.

But you don't want to make them a big part of a long-term portfolio, as they might not even keep up with inflation. I'd hate to see a 401(k) with 30% in a low-risk bond fund.

Russel Kinnel has a position in the following securities mentioned above: VBTLX. Find out about Morningstar’s editorial policies.