That is not why the net asset value of bond funds fluctuates when interest rates fluctuate. It fluctuates because the net asset value of individual bonds fluctuates when interest rates fluctuate. That is true whether you hold the bonds directly or hold them in a fund.You buy into a 4% market and if rates rise, the fund sells off those 4% bonds, at a loss, to buy new higher yielding bonds.
Credit risk is diversifiable. If you are buying individual with credit risk, you likely are taking uncompensated credit risk— the yield is compensating for the risk in a diversified portfolio of such bonds.It takes time and research, but I feel it's more secure knowing (subject to a rare default), I'll get 100 cents on the dollar…
Statistics: Posted by Northern Flicker — Tue Feb 10, 2026 2:32 pm — Replies 18 — Views 1013