u/GibbyG

Why is it that most medium-risk funds state they hold an allocation of exposure to bonds however, they do not hold bonds in the sense which there is a capital return upon maturity. Instead capital fluctuates and no maturity is offered in which your original capital may be returned if held to redemption therefore, my questions is, why is a fund/etf used for the bond allocation for a medium-risk portfolio when there is no protection of downside.

Reference, in periods of increased volatility, correlation becomes positive across most asset classess especially on the downside in which bond funds/etfs act as volatile as stocks and a drag on performance instead of the needed protection of a portfolio.

Am I missing something here?