The Big Screen: Welcome to the World of Bond Funds

Stocks have bucked like a mechanical bull turned up too high this year, shaking a fair amount of change from your pockets. So let's check out the market's less scary alternative: bond funds.

Why bother with bonds? Even though they typically return less than an investment in stocks, over time they've reduced a portfolio's volatility more than they've reduced its returns.

That probably doesn't sound like a bad proposition to many shareholders in last year's growth fund darlings who are now on the mat. The average big-cap growth fund is down more than 7% and the average technology and telecommunications sector funds are down more than 11% and 20%, respectively, according to Lipper. These losses wouldn't have been so painful if you'd kept at least a modest amount of your portfolio in bonds. ...