4 Bond-Fund Basics Worth Knowing
A few nuggets to consider if you’re relatively new to bond funds.
Your Benchmark is Worthless
Well, maybe not if you're talking about niches like Ginnie Mae or Treasury funds, but when it comes to your core bond portfolio, the Bloomberg Barclays (née Lehman Brothers) U.S. Aggregate Bond Index just isn't going to do you much good.
True, correlations between the index and the intermediate-term bond Morningstar Category have come back to high levels since the global financial crisis. Still, the index became a lot more homogenous after the crisis and many fund managers have gone the other way, with the largest (and often best-performing) funds in the group investing heavily outside of the index.