| Individual Bonds | Bond Mutual Funds | Closed-End Bond Fund | Bond UITs
| Bond ETFs |
Return of Principle | Principal returned
at maturity or when
bond is called | Principal at risk | Principal at risk | Receive principal
back as bonds
mature or are called | Principal at risk |
Maturity Rate | Set Maturity Date
| None
| None
| Liquidated on Set date
| None
|
Income Payments | Usually fixed and
paid semiannually
(except zero-coupon
bonds)
| Fluctuating monthly
payments
| Fluctuating monthly
or quarterly
payments
| Fixed monthly, quarterly,
or semiannual
payments
| Fluctuating monthly
payments
|
Liquidity | Trade on secondary
market above or
below face value,
some can be hard
to sell
| Bought and sold at
net asset value
| Trade on an
exchange with daily
fluctuation in the
unit price
| Bought and sold at
NAV
| Trade on an
exchange with daily
fluctuation in the
unit price
|
Redeemable | Redeemable only at
maturity or when
called
| By selling shares at
prevailing NAV
| By selling shares at
prevailing unit price
| By selling shares at
NAV
| By selling shares at
prevailing unit price
|
Default Risk | Varies by credit
quality of bond
| Limited by
diversification
| Limited by
diversification
| Limited by
diversification
| Limited by
diversification
|
Interest Rate Risk | Exists but declines
as bonds near
maturity
| Exists and sensitivity
to interest rates
depends on
portfolio of
holdings
| Some closed-end
funds are highly
leveraged, they can
be very sensitive
to interest rate
increases
| Exists and sensitivity
to interest rates
depends on
portfolio of
holdings
| Exists and sensitivity
to interest rates
depends on
portfolio of
holdings
|
Expenses | No ongoing expenses;
transaction
charge built into
price for purchases
and sales
| Annual fees; may
have front or backend
sales charge
| Annual fees
and brokerage
commissions
| Annual fees (usually
lower than mutual
fund fees) and
front-end sales
charge
| Annual fees
(usually lower than
mutual fund fees)
and brokerage
commissions
|
Reinvestment | No automatic
reinvestment option
| Automatic
reinvestment option
| Automatic
reinvestment option
| Automatic
reinvestment option
| Automatic
reinvestment option
available for most
|
Professionally Managed | No
| Actively Managed
| Passively Managed
|
| Passively and
Actively Managed
|
Diversification | Need to purchase
multiple bonds to
diversify
| Constantly changing
portfolio of bonds
| Constantly changing
portfolio of bonds
| Fixed portfolio
of bonds; less
diversified than
many bond mutual
funds, closed-end
funds or ETFs
| Constantly changing
portfolio of bonds
|
