While most individual bonds pay interest twice a year, most bond funds distribute interest monthly. Automatic reinvestment of income. Reinvestment of bond fund income back into the bond fund can be done conveniently and painlessly. A bond fund may hold bonds from hundreds of different issuers, so a default by one bond issuer would have only a slight effect on a mutual fund investment. This should make the average investor much more comfortable with taking credit risk in bond funds than if purchasing individual bonds.
Few investors have the time or expertise to compare the thousands of bonds available.
In addition, professional credit analysts review the creditworthiness of the individual bonds in the portfolios. Liquidity and tax records for trading. You can buy or sell shares of a bond fund whenever you want. With most bond funds, you can buy and sell shares, change distribution options, and obtain information by telephone, by mail, or online. If you decide to invest in a bond fund, you then face a decision whether to pursue an index or active strategy.