1. I don't know much about that fund but just because it's in bonds doesn't mean you'll be able to get your money back in 5 years. Check the duration (weighted average maturity) of the bond portfolio in the fund. If it's >5 years, then a rise in long term interest rates is a big risk for you. I'm on the same sort of schedule (well, maybe a bit sooner than 5 years), and I'm basically holding cash in "high interest" savings accounts for the mortgage down payment. Not the whole down payment, but most of it. I'm of the opinion that if you NEED the money short term, you better make sure you don't lose it. It's quite possible I'm more risk averse than I should be, but that's my nature.
2. I don't think being 8 years from retirement is relevant. What is relevant is how you plan to retire, i.e. will you have part-time income, will you be alright with variable withdrawals from your 'stache to protect against bad years, or is it possible to only live off the inflation-beating portion of your 'stache plus part-time income? If the latter, then no worries as your wealth will last forever.