Decrease interest rate risk by holding both short-term and long-term bonds, thereby spreading risk along the interest rate curve. Sign up or log in Sign up using Google.
From Investopedia after websearching "define laddered bond fund": Decrease interest rate risk by holding both short-term and long-term bonds, thereby spreading risk along the interest rate curve. If rates are rising, as one bond matures the funds can be re-invested into higher yield bonds.
Decrease re-investment risk because as one bond in the ladder matures, the cash is re-invested, but it only represents a portion of the total portfolio. Even if prevailing rates at the time of re-investment are lower than the previous bond was returning, the smaller amount of reinvestment dollars mitigates the risk of investing a lot of cash at a low return.
Maintain steady cash flows to encourage regular saving for investors looking for an income-producing portfolio. Good point, tnx for the edit. Sorry, but this does not answer my question which is much more specific than bond laddering in general. I already read this Investopedia article before, and know the basics of bond laddering. In that case I'm not sure what question you're asking.
A laddered bond fund is just a bond fund which is explicitly setting up its investments as ladders. As you say, there's more similarity than difference; it's just a matter of investing strategies being employed when deciding what to buy or sell to maintain the fund's preferred balance.
My second para contains my main question: To wit, here, how would one decide in which to invest, given their similarities? Would you please repost your answer as a comment? Sign up or log in Sign up using Google. Sign up using Facebook. Sign up using Email and Password. FOMO fear of missing out , which can lead to buying high, and FUD fear, uncertainty and doubt , which can lead to selling low. The latter is occasionally referred to as SODLing.
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