1. What is the expected return of bond funds related to?
1, bond interest
Expected interest income is the fixed expected income source of bonds, and fund companies can get fixed expected interest income after the maturity of bonds. The coupon price of a single bond is generally fixed at 100 yuan, so the expected return of bond interest mainly depends on the level of bond coupon rate.
2. Bond price
In addition to maturity, bonds can also circulate in the secondary market, and the market transaction price may be higher or lower than the par price. Fund managers can make use of the fluctuation of bond trading price to buy low and sell high to earn the difference. Similarly, fund companies will lose money if they buy high and sell low.
3. Leveraged investment
Fund companies can also use their own bonds as collateral to obtain liquidity, thus investing more bonds, that is, leveraged investment. The greater the leverage ratio, the greater the investment risk.
2. Under what circumstances will bond funds lose money?
1, credit risk
The bonds invested by fund companies may have the risk of default. Once the bond defaults, the expected return of the fund will be reduced.
The investment targets of domestic bond funds are mainly government bonds, central bank bills and other categories. Most of these bonds are issued by the government or large financial institutions with high credibility, and the risk of bond default is not great.
2. Interest rate risk
The change of bond price is closely related to the market interest rate, so interest rate fluctuation is the main risk factor of bond funds. When the market interest rate rises, the bond price will fall.
The above contents about the expected return of bond funds, I hope to help you. Warm reminder, financial management is risky and investment needs to be cautious.