It is not only important to understand each asset class in itself, it is equally important to understand the difference between different asset classes. To make an informed choice, an investor is expected to know the relative pros and cons of the investments.
One should understand how mutual funds and bonds stand against each another:
They Are Not Mutually Exclusive: Firstly they are not mutually exclusive. This means that you could be investing in mutual funds and the money could be going into bonds. Hence there is some degree of overlap. In fact, every mutual fund has some amount of money that is kept aside for investing in bonds. This adds stability to the overall portfolio.
Mutual Funds Give More Diversification: If you invest in mutual funds, your money can be more diversified. Let