What is a bond?

The essence of bonds is a kind of evidence that institutions openly borrow money from everyone and promise to repay the principal and interest.

According to different borrowers, bonds can be divided into three categories:

I. Government bonds

This is evidence that the government borrowed money from us.

Mainly divided into two categories:

(1) borrowed by the central government, known as the national debt.

(2) Borrowing by local governments is called local bonds, also known as municipal bonds.

Two. Financial institution bonds

It is a voucher for banks, securities companies, insurance companies and other financial institutions to borrow money from us.

There are three main categories:

The funds borrowed by the central bank are called central bank bills.

(2) Policy bank loans are called policy financial bonds, such as CDB issued by China Development Bank.

③ Other financial bonds: interbank deposit certificates, commercial bank bonds, securities company bonds and insurance company bonds.

Third, corporate bonds.

Refers to the certificate that the enterprise borrows money from us.

Corporate bonds can be divided into: ordinary corporate bonds, corporate short-term financing bonds, medium-term notes, asset-backed securities and convertible bonds.

What are the bond funds?

Bond funds can be divided into pure debt funds and partial debt funds according to the proportion of investment in stocks.

Pure debt fund: a fund that invests all its funds in bonds. No matter how stormy the outside market is, we are determined to stick to the bond to the end!

Partial bond fund: at least 80% of the funds are invested in bonds, and the rest are invested in stocks or other investment products.

The choice of pure debt fund has four aspects:

(1) The comprehensive evaluation of history can be entrusted to professionals, that is, the Morningstar rating.

(2) the establishment time, not too short, so the benefits can be referred to, the establishment time >; Five years.

③ The fund size should not be too small, at least > 500 million, to avoid the risk of liquidation.

④ Analyze the types of bonds held by pure debt funds and the proportion of different types of bonds, and choose the one with lower risk.

When choosing a pure debt fund, it is recommended to give priority to holding government bonds and financial institution bonds, accounting for more than 20% of the total net assets.

Advantages of partial debt fund:

Compared with pure debt funds, partial debt funds can get more income in the bull market.

Compared with stock funds, debt-biased funds tend to have a smaller decline in a bear market, and belong to funds that can be advanced and retired.

The choice of partial debt fund:

In addition to the above conditions, it depends on the direct elimination of fund managers who have served for less than 5 years.

Partial debt funds have 20% funds to invest in stocks. Therefore, the fund's excess performance mainly depends on the fund manager's ability to buy and sell stocks.

Purchase opportunity:

Buying bond funds should also choose the right time, because bonds can be listed and traded. In the process of buying and selling, the price of bonds will fluctuate because of the relationship between supply and demand, just like stocks.

Once the interest rate of funds in the market, that is, the market interest rate, increases, investors will be more willing to borrow money than buy bonds, so that the price of bonds will fall and bond funds may lose money, which is the interest rate risk of bonds.

Therefore, we generally buy bond funds when the market interest rate is high, and sell them when the market interest rate is low, so as to realize low buying and high selling.

The market interest rate can refer to 10 national debt yield.

So as long as we observe yield to maturity, a national debt with a year of 10, we can know the current market interest rate and judge whether it is the right time for bond funds to enter or leave the market.

According to historical statistics, the average yield of China's 10-year treasury bonds is 3.27%-3.56%, which is the average market interest rate. Because the market interest rate fluctuates little and is relatively stable, this average is stable for a long time.

Market interest rate > 3.27%, bond price is low, buy bond funds.

The market interest rate is lower than 3%, the bond price is higher, and the bond fund is sold.

Check the current yield of 10-year government bonds, and check it directly on the British financial website.