Compared with stock funds, bond funds mainly invest in fixed-income securities and are less affected by the stock market, so the risk is lower; Compared with investing in a single bond, bond funds can effectively reduce the risks that a single investor may face by investing in different bonds by pooling investors' funds, so the risks are lower.
Investment bonds have regular interest returns and promise to repay the principal and interest at maturity, so the income of bond funds is more stable than that of equity funds.
Extended data:
Influencing factors:
Two factors affecting the performance of bond funds;
One is interest rate risk, that is, the sensitivity of the invested bonds to interest rate changes (also known as duration).
The second is credit risk. When choosing a bond fund, we must understand its interest rate sensitivity and credit quality. On this basis, we can understand how high the risk of the fund is and whether it meets your investment needs.
Interest rate sensitivity: the rise and fall of bond prices is inversely proportional to the rise and fall of interest rates. When interest rates rise, bond prices fall. It is necessary to know the change of bond price, so as to know how sensitive the net asset value of bond funds is to the change of interest rate, and the duration can be used as an indicator to measure it.
The maturity of a bond depends on three factors: the maturity date, the cash flow of principal and interest expenses, and the yield to maturity. Duration is calculated in years, but it is different from the term of bonds. With this indicator, you can know how much the fund under investigation has earned or lost because of the change of interest rate.
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