The main difference is in how you receive your money.
When you buy FR Bonds, you get a fixed coupon (return) every 6 months, which is directly transferred to your account.
Unlike Fixed Rate (FR) Bonds, in Bond Mutual Funds, the returns from coupons are automatically added to your investment value. You can only enjoy the results once you sell your investment, and the value may fluctuate depending on market conditions.
Other differences:
FR Bonds are directly issued by the government, while Bond Mutual Funds are managed by Investment Managers.
With FR Bonds, there’s no management fee, but Bond Mutual Funds have an Expense Ratio.
With FR Bonds, you get both Capital Gains and coupons, while Bond Mutual Funds give you Capital Gains and dividends.
