The Wall Street Journal, December 28, 2012 - "Bond Funds: The Downside"
Kirsten Grind's "Bond Funds: The Downside" reports on the recent high returns earned by some short term bonds funds. These higher yielding funds tend to hold bonds with longer maturities and more credit risk than the bonds which dominate lower yielding bond funds' portfolios. The article quotes Craig McCann pointing out that the bond funds that have the highest yields in 2012 will suffer the largest losses if credit spreads widen again as they did in 2008. The higher risk taken by some bond funds to boost yields in comparison to their peers is the subject of our What Does a Mutual Funds' Term Tell Investors? and our What Does a Mutual Funds' Average Credit Quality Tell Investors?