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What's the difference between buying bonds and buying bond funds for the long-term?
A bond fund will typically own a range of bonds of various durations, in your specific fund: The fund holds high-quality long-term New York municipal bonds with an   average duration of approximately 6–10 years So through this fund you get to own a range of bonds and the fund price will behave similar to you owning the bonds directly.  The fund gives you a little diversification in terms of durations and typically a bit more liquidity.  It also may continuously buy bonds over time so you get some averaging vs. just buying a bond at a given time and holding it to maturity.  This last bit is important, over long durations the bond fund may perform quite differently than owning a bond to maturity due to this ongoing refresh.  Another thing to remember is that you're paying management fees for the fund's management. As with any bond investment, the longer the duration the more sensitive the price is to change in interest rates because when interest rates change the price will track it. (i.e. compare a change of 1% for a one year duration vs. 1% yearly over 10 years) If I'm correct, why would anyone in the U.S. buy a long-term bond fund   in a market like this one, where interest rates are practically   bottomed out? That is the multi-trillion dollar question.  Bond prices today reflect what "people" are willing to pay for them.  Those "people" include the Federal Reserve which through various programs (QE, Operate Twist etc.) has been forcing the interest rates to where they want to see them.  If no one believed the Fed would be able to keep interest rates where they want them then the prices would be different but given that investors know the Fed has access to an infinite supply of money it becomes a more difficult decision to bet against that.  (aka "Don't fight the Fed").  My personal belief is that rates will come up but I haven't been able to translate that belief into making money ;-)  This question is very complex and has to do not only with US policies and economy but with the status of the US currency in the world and the world economy in general.  The other saying that comes to mind in this context is that the market can remain irrational (and it certainly seems to be that) longer than you can remain solvent.