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Best Bond Funds for Income Investors Today


For the last four years, investors have braced for higher rates, only to be confounded by a fickle bond market. While most observers expect the Federal Reserve to raise short-term rates, probably in the second half of 2015, that’s no sure thing. And even if it does, rates likely will only go up in small steps of 0.25 percentage point at a time.

What’s a bond investor to do with another year of uncertainty ahead? Build a mix that straddles the fence between the odd chance that rates will stay lower longer than the world anticipates and the possibility that rates will rise, albeit slowly. Shortening maturities, the traditional strategy for coping with rising rates, may not be the best move this time around. And a strategy of investing in high-yield “junk” bonds, which usually hold up well when rates climb, may not work this year given the woes of the energy sector.


The six funds we discuss here will earn you a good yield and provide some defense against interest-rate uncertainty.


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