"(Bloomberg) -- A crisis in credit markets deepened on Sunday as a cluster of funds that own mortgage bonds sought to sell billions in assets to meet investor redemptions, sparking pleas for government intervention."
A lot of smart people argue that bond funds are as safe or safer than owning individual bonds. This is why I disagree. In extreme financial distress, everything not nailed down gets sold. Liquidity dries up in the bond market, but redemptions continue forcing the fund to sell at fire sale prices. If you own individual bonds, you suffer the same liquidity problems, but panic sales from other people don't lock in losses for you. As long as you can ride out the storm and the issuer doesn't go bankrupt, you come out OK. My high quality, curated bond ladder is holding up for now. There are low or no bids for many of them, but since I always planned to hold to maturity, that's not an issue.
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