Are bond funds reliable?
Low risk and relatively reliable. According to the regulations, more than 80% of the funds of bond funds are mainly invested in bonds, which is more stable than other types of funds or stocks. However, in practice, bond funds still have credit risk and market interest rate risk, which will affect the net value fluctuation of bond funds and lead to the possibility of debt-based losses. In short, bond funds are a relatively stable investment method, but there are risk factors, and bond funds may also generate losses.
Specifically, the income sources of bond funds include coupon income and bond spreads:
1 coupon income: after the investment bonds are held as agreed, they will get corresponding coupon income, which is a relatively stable source of income for the debt base. Generally speaking, the lower the credit rating, the longer the maturity of the bonds invested, the higher the coupon rate, and the higher the risk.
2 Bond spreads: As a tradable financial asset, bonds will have price fluctuations like stocks, with ups and downs. Therefore, investors can also obtain spreads by "buying low and selling high", and bond price fluctuations will lead to income fluctuations.
Therefore, when the bond market price falls, the spread income may be negative, or even the negative value of the spread income changes the fixed value of the original coupon income, resulting in the negative value of the whole bond fund.
Because bond funds are also affected by credit risk and market interest rate, the possibility of losses will increase. From the perspective of credit risk, once the bond fund held by investors defaults, it will not only fail to get the coupon income, but may even fail to recover the principal. At this time, the net value of the debt base will also fall. Judging from the market interest rate, when the market interest rate goes up, the bank interest rate goes up, and investors are more willing to put their funds in the bank. When the demand for bonds decreases, the funds in the bond market will partially flow out, driving the price down.
In short, compared with high-risk investment methods such as stocks and futures, the income of bond funds is more stable. Under normal circumstances, investors can get good returns by holding them for a long time, but it should be noted that stability does not mean absolute returns. Any investment method is risky, so investors should think rationally and invest cautiously before investors.