Even after two favorable monthly inflation reports, cash and bond yields remain high and steady. It continues to be a buyer’s market. Still, readers are often uncertain how best to proceed, particularly with new or rollover money. You may be tempted by a basic broad-based bond market index fund. But you can do better.
Your goal should be two guarantees: high yield to maturity and full recovery of principal. Neither is assured using index-based exchange-traded funds. An actively managed, go-anywhere fund from an ace manager such as Baird, Fidelity or Pimco will out-return the indexes over the years, but there is near-term price risk if managers mistime bets or if hostile reports on jobs or inflation or another trading signal rips into bond values.
