The Downside of Mutual Bond Funds

Marvin Appel

Bond mutual funds can be desirable if you want the yield you can get from longer-term bonds but want the freedom to access some or all of your investment in the nearer term. But beware,—most bond funds are not worth your trouble, especially those that come with an up-front or back-end sales load or funds with high-expense share classes such as class C shares.

Expenses in Bond Funds

The services of a bond fund manager and the administrative support he or she requires come at a price. That price is called the expense ratio of the mutual fund and represents the amount the fund management takes each year from the shareholders’ investments as pay for services rendered. The expense ratio is charged against ...