In addition to altering your asset mix, you can curtail the volatility in specific asset groups, too.
For instance, many portfolios include intermediate-term bonds at their core. To damp the volatility of an intermediate-term-bond portfolio, consider adding a short-term bond fund to your mix.
Because the maturity dates of short-term bonds are nearer than those of intermediate-term bonds, short-term bonds tend to be less volatile. They often yield less, as well. Finally, they usually gain less than intermediate-term bonds when interest rates fall, but lose less when rates rise.
Many online financial Web sites, such as Morningstar.com, offer screening tools that are a good starting point for ideas about conservative bond funds. Additionally, analyst recommendations, or picks, are a great place to begin, too. Morningstar.com Premium Members can access Morningstar Fund Analyst Picks. (And nonmembers can sign up for a free trial.)
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