High Yields Lure Investors Back to Bond Funds

After a long dry spell, money is once again flowing into bond funds. But recent investors are not necessarily the safety-seekers these funds have traditionally attracted. In fact, it's quite the opposite. Most new cash appears to be going into risky junk-bond funds.

Investors seem to be chasing the double-digit yields many of these funds are sporting, a situation that leaves some financial planners uncomfortable.

"It's entirely clear to me that people are stretching for higher yields and taking on more risk than they need to," says Frank Armstrong, president of Miami-based Managed Account Services and chief investment strategist for DirectAdvice.com. ...