> "diversification if you're buying corporate bonds":
> The shorthand here is over my head. What is the point?
If you buy a single bond, and the company defaults, you're screwed.
If you buy a bunch of different bonds, from different companies, if any one of them defaults, you're probably okay. So: a bond fund, which has access to a wide variety of bonds, can do two things:
- Keep you from losing any single bond - Provide a range of yields, such that the aggregate is better (risk-adjusted)
than any single bond you can buy
If you can buy a bunch of bonds on your own, you don't need the fund, you are one :-)
/jordan