Your Guide To Bond Funds

New yardsticks find diamonds in the rough among some sluggish categories

Call them the ugly ducklings of mutual funds. Bond funds have been ignored by the investors. While investors hold $886 billion in bond funds, they put only $13.2 billion in new money into them last year compared with $222 billion in fresh cash that poured into equity funds. And most of that flowed to high-yield or "junk-bond" funds. Government-bond funds, with their portfolios full of U.S. government-backed debt, bled as investors took more money out than they put in. Municipal-bond funds suffered the same fate.

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