Bond Funds Swimming Naked
Many of the bond mutual funds that posted losses in 2008 were hurt by the same crazy events that hit everyone else. But while manager after manager recites the same list of causes for his fund's painful losses, not all suffered the same level of decline. Usually, losses have been explained as untimely or wrongheaded sector calls. In a troubling turn, a number of mutual funds that made unusually concentrated or reckless sector bets borrowed money to create investment leverage, or have used derivatives in very speculative ways.
Eric Jacobson