The Best All-in-One Bond Funds

Our favorites stir in some foreign and domestic bonds to spread your risk and boost your return.

If you didn't own bonds over the past ten years, you missed out. in a decade during which U.S. stocks experienced two major busts, almost every major category of bonds returned at least 6% annualized -- and did so with much less drama. But as with any aspect of investing, the past is not necessarily prologue. And the performance of the past ten years certainly doesn't mean you can invest willy-nilly in any segment of the bond market and expect to do as well over the next ten.

The bond market includes at least a dozen categories, from Treasuries to speculative high-yield corporates to IOUs issued by foreign governments and companies. Most bond mutual funds specialize in only one segment of this vast marketplace. So if you want broad coverage, you might choose to buy a collection of funds -- those that specialize in, say, Treasuries, mortgages and junk, and in short-term and long-term maturities.

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Elizabeth Leary
Contributing Editor, Kiplinger's Personal Finance
Elizabeth Leary (née Ody) first joined Kiplinger in 2006 as a reporter, and has held various positions on staff and as a contributor in the years since. Her writing has also appeared in Barron's, BloombergBusinessweek, The Washington Post and other outlets.