This is not correct. What you're referring to is holding a bond to maturity versus holding a bond fund. If rates were to rise, both would be (relatively) equall

This is not correct. What you're referring to is holding a bond to maturity versus holding a bond fund. If rates were to rise, both would be (relatively) equally affected. The difference would be that the price of the bond would revert to the face value of the bond as it got closer to maturity. Obviously the downside of this is that you are basically keeping your principal value at the end of the day, but you're forced to hold a bond that's giving you a below market return until it matures. For most people, this makes absolutely no sense. On top of that, you can buy and sell a mutual fund based on the asset value of the fund at any time, while the bond market is opaque and you often get pricing that is very far off the average unless you are a large institutional buyer/seller. There are massive economies of scale in bonds that you don't see in the stock market. If you are trying to invest millions of dollars, buying individual bonds might make more sense, but at that point you're going to want someone to help you determine the difference between individual bonds and the covenants that one bond has over another, but even then you still run the risk of getting bad pricing on buying those bonds.