Holding a bond fund to its duration does not guarantee that you will not lose your principal - fund value could drop at any point. Holding for the duration from a price drop / yield increase and reinvesting will guarantee that you don't lose from that price drop.I asked this question: viewtopic.php?t=421818
I don't think it can be mathematically proven that holding a bond fund to its duration ensures that you will not lose your principal. That is the advantage of a bond ladder. You know exactly what you get.
I view a bond fund as an investment tool, which may lose value, and has a different correlation than other asset classes.
I have stopped saying that a person will get they principal back if they keep their bond fund as long as the maturity duration. It cannot be proven.
The issue isn't bonds (or bond ladders) v. funds, it's portfolios with a more or less constant duration (such as a fund or rolling ladder) v. a portfolio with a constantly declining duration (such as an individual bond or non-rolling ladder).
Statistics: Posted by exodusing — Sat Apr 27, 2024 5:34 am — Replies 55 — Views 3650