Navigating bond funds: Yes to yields but risks aplenty in high-yield assets
Bond funds enable diversification with modest investment, but steep redemptions at times of crisis can cause long-term investors to suffer
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IN FIXED income investments, the toss-up between a direct investment in a bond and a bond fund seems a no-brainer.
Here’s the most obvious advantage: A fund enables you to diversify across a basket of issuers with a very modest lump sum of S$1,000 or less if you opt to invest regularly. A direct investment in a single bond typically needs an outlay of at least S$200,000 or US$200,000.
But there are advantages too in holding single bonds – if you can afford it and have studied an issuer for credit strength.
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