...some the sting out of the stock market's 6% decline.

That's what bonds are supposed to do. Their relatively low volatility and steady interest payments are a source of comfort to investors when stocks falter. In the bear-market year of 2002, when Standard & Poor's 500-stock index fell 22%, the Lehman Aggregate Bond index gained 10%. As the U.S. headed toward recession in 1990, the bond index rose 9% as stocks surrendered 3%.

True, in the long run stocks will make you more money. Over the past 80 years, they've gained an annualized 10.4%, while long-term government bonds have returned 5.5%, only a couple of percentage points ahead of the inflation rate. But bonds are not the dead weight they may seem to be when good times are rolling. Their mere presence in your portfolio diversifies your holdings and dampens risk. Thus, bonds belong in nearly every long-term investor's portfolio.

The Kiplinger 25, our list of the top mutual funds, has always included bond funds (five are on the current list). But many others deserve your consideration. So here is an expanded list of the top bond funds. We've divided the funds into three categories: safe taxable funds that could serve as core bond holdings (or even your only bond fund); aggressive funds that might play a supporting role in a bond portfolio; and municipal-bond funds, which offer tax-free income and are particularly...

NOTE: All illustrations and photos have been removed from this article.



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