Thanks
@PaulNYC great info. I think my personal concern is when you look at bond funds, perhaps especially those offered by quality managers, or by passive index funds is that when the interest rate change occurs, the rebalancing will lock in losses - my personal approach to bonds, is that I am not in them at this time, but if I was I would select single bonds that fit within my duration horizon.
I can't see the logic of buying a fund that would sell below face value in order to keep ratios intact - when a buy/hold strategy would avoid that. But I guess that calculations on this could be made to see if it is savvier to sell and buy with a better coupon... I just see it as an overall losing proposition in this current environment.
Credit risk is interesting to explore further, thanks for bringing it up, I had focused more on interest rate risk, but it is very valid - in fact it is why I am less impressed with so called alternative investments such as Prosper.com et al, as I feel the correlation is too high, should the economy suffer, these guys are going to default faster than the market tanks.