Navigating bond funds: Yes to yields but risks aplenty in high-yield assets

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.