A bond fund's yield refers to the interest paid by the bonds it owns, expressed as an annual percentage rate based on share price. A fund's total return considers its yield and another critical factor - changes in share price. Therefore, total return is a better measurement of your fund's overall performance. As this chart shows, while stocks fell significantly during these three market downturns, bond values rose. Including bonds in your investments may help soften the stock market's downturns.
Past performance is no guarantee of future results.
This article is from the Financial FYI series produced by the Education and Guidance department of American Century Investments.