Some hedge funds have experienced huge losses from bond investments, and individual investors ought to take notice, cautions financial adviser William Suplee IV. Suplee, writing in today's The Legal Intelligencer (a fellow ALM publication), sets forth a safe approach to bond investing that keeps maturities short, invests only in high-grade obligations, and diversifies broadly.
You can't go wrong in following this advice. I merely note that some investors more comfortable with risk might reasonably be willing to hold high-yield and emerging-market debt to obtain additional diversification benefits. At most, these investments should be a fairly small portion of your holdings. Leaving the risky bond strategies to the pros, as Suplee recommends, is a perfectly sensible choice.