The need for transparency

With no apparent likelihood of moving to an exchange-traded system, the main problem with bond fund performance figures is the need to improve disclosures

A potentially serious anomaly among bond funds occurred in 2008. Corporate bonds are not traded on exchanges the way stocks are and so there is a degree of judgement involved in valuing them. During the credit crunch, it appears corporate bond fund managers valued the same bonds at significantly different prices, resulting in larger-than-expected variances for funds holding similar assets. This should even out in the long run, but investors who bought or sold bond funds during the credit crunch may have been disadvantaged, while others may have received an unfair advantage – driven simply b...