Individual bonds vs a bond fund

Introduction
Vanguard Investment Counseling and Research has a detailed discussion.

If you buy individual bonds, you pay no management costs, and you can control your allocation precisely; a fund has a management fee, and has an allocation set by the manager. However, you will pay a commission to buy bonds, unless you buy Treasury bonds from Treasury Direct, and another commission to sell before maturity. Bond funds also have trading costs not reflected in their expenses, but the costs are likely to be very low. And the costs of the funds themselves can also be low; Vanguard's bond funds have expenses of about 0.2% for Investor shares and 0.1% for Admiral shares.

But the main advantages of bond funds are diversification and liquidity. A corporate-bond fund can be diversified; it is much harder for an individual investor to hold a diversified portfolio of corporate bonds. (Diversification is irrelevant for Treasuries, which have no credit risk.) You can buy and sell a bond fund in any amount, and reinvest interest payments in the fund; if you hold individual bonds, you can only sell a whole bond, and any interest received cannot be automatically reinvested unless it is enough to buy a new bond.