Is a bond ladder better than a bond fund?

Question: During retirement when one is withdrawing funds from a portfolio, which is more appropriate as a distinct asset  category, bond funds or a bond “ladder”?

Gordon’s answer: Each has its own advantages. A good bond fund offers a well-diversified portfolio and regular distributions, usually monthly or quarterly.

However, bond funds can be expensive because of the management expense ratios (MERs), depending on which one you buy. The Phillips, Hager & North Bond Fund, which is one I have owned and recommended for years, has an annual MER of 0.6 per cent, which is very cheap.

But AGF Canadian Bond Fund has an MER of 1.97 per cent, which is a lot to pay especially at a time when interest rates are low. 

A bond ladder consists of a portfolio of bonds with different maturity dates and which, ideally, will make interest payments at intervals that meet your cash flow needs. There is no annual MER to eat into your returns but you will need to invest substantially more money in order to get the same diversification that a bond fund will provide.