[CRFSaver]

One of the differences between a money market mutual fund and a bond fund comes in, the term limit on investments and rule 2A7. Money Market funds fall under rule 2A7 (dont ask me of what act cause I can't remember). To be considered a 2A7 fund the maturity of a single investment cant be longer then 18 months. The beauty of 2A7 is that a fund does not need to mark to market its holdings. It can value them at the discount or premium and let them amortize to par. Because of this feature Money Market funds very rarely go below $1.00 a share. I believe there has been either 1 or 2 times this has happened. When it does happen it is because there was a default in one of the investments. This happens from time to time but the management company usually buys the investment at par from the fund to maintain that $1.00. For example Strong did this when a finance company defaulted and they held commercial paper.

Bond funds have many characteristics and there are lots of different ones depending on your risk tolerances. The most famous of them being the Pimco Total Return fund which is one of the largest funds in the world. IT is run by Bill Gross who is a legend in the bond world. Most funds will elt you know if they are an short, intermediate or long bond fund. Some specialize in a particular market. MBS, Government, Corporate Bond, High Yield (Junk), International, etc.

If you like Bill Gross is my advice is not to pay the load for the Pimco Total Return but to invest in the Fremont Bond fund that is "sub-managed" by Pimco and Bill Gross. I am a big fan of the Managers Short Duration and Managers Intermediate duration funds. They are no load bond mutual funds. The reason I like them is the "sub-manager" is a company called Smith Breeden associates. These guys are some of the smartest I have ever met. Pioneers in the Mortgage Backed Securities business. I used to sell bonds to them is how I came upon them.

I am also a huge fan of Balanced funds. For some reason my balanced funds have always outperformed any other fund I have for some reason. Go figure.