Individual Bonds vs. Bond Funds: What's the Difference?

Individual bonds and bond funds can both provide an income stream.

Coupon, maturity, and yield

An individual bond has a coupon rate.

By contrast, a bond fund does not have a coupon rate.

Yield is the expected return.

Varied Performance

Individual bonds and bond funds have performed differently.

Source: London Stock Exchange Group, 2025.

Interest rate sensitivity

Bonds and bond funds are sensitive to changes in interest rates.

Bond funds typically replace underlying bonds.

Diversification does not guarantee a profit.