Bond funds seek high current income consistent with reasonable risk and capital appreciation. These funds can supply a steady and predictable stream of income, reduce a portfolio’s overall volatility, produce more income than money market funds and, at times, outperform stocks.
Risk for a bond fund results from a change in the direction of interest rates. This interest rate risk is most commonly measured by duration. Duration is a measure of price sensitivity to a change in interest rates. Intermediate-term bond funds have average durations that are greater than three and one-half years and less than six years. Generally, the shorter the duration, the less volatile a bond or bond fund.
PTTRX Pimco Total Return (PDF)
Vanguard Total Bond Market Index
Templeton Global Total Return
Vanguard Intermediate-Term Investment-Grade Corporate