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How to Spot a Bad Bond Fund

It's not that hard if you know where to look.

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A version of this article appeared on Morningstar.com on Nov. 13, 2013.

OK, so "bad" might be a little strong. It's difficult to point to any one or two factors and credibly argue that they alone make a bond fund bad. However, there are red flags that investors can watch for to help ferret out those bond funds that are likely taking on more risk of a blowup than others. The presence of one of these factors might be rightly interpreted as a reason to sit up and pay closer attention. If a bond fund flies multiple red flags, though, chances are that it's best left alone.

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Eric Jacobson does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.