What is a fixed income fund?
Fixed income fund is a kind of fund that mainly invests in fixed income securities such as bonds and money market instruments. It is an open-end investment fund realized by fund companies or fund managers pooling investors' funds and purchasing various fixed-income securities. According to different investment strategies and styles, fixed-income funds mainly include bond funds and monetary funds:
1. bond fund: it is a fund product with bonds as the investment target. Its investment strategy is usually based on obtaining stable income, and it is configured by purchasing various bond assets such as government bonds, corporate bonds and medium-term notes.
2. Monetary fund: a fund product with short-term financial management tools as the main investment target. Its investment strategy usually adopts the concept of pursuing profits and avoiding risks. In most cases, they will buy short-term financial management tools, such as bank deposits, central bank bills and commercial bills. These tools are usually low risk and liquidity, but the yield is relatively low.
What are the advantages and disadvantages?
Advantages:
1, low risk. Fixed-income funds mainly invest in fixed-income securities, and their risks are lower than those of high-risk assets such as equity funds.
2. Stable income. The income of fixed-income funds mainly comes from the interest and principal of fixed-income securities, so its income is relatively stable.
3. The investment threshold is low. Fixed income funds usually have a lower minimum investment amount, which makes it easier for small investors to enter the market.
4. Good liquidity. Fixed-income funds can be bought and sold at any time on the trading day, which is highly liquid and investors can buy and sell according to their own needs.
Disadvantages:
1, the income is relatively low. Compared with high-risk assets such as stock funds, fixed-income funds have relatively low returns.
2. Inflation risk. Because the rate of return of fixed-income funds usually cannot keep up with the inflation rate, there may be inflation risks.
3. Interest rate risk. Bond prices are inversely proportional to interest rates. If the interest rate rises, the bond price will fall, so there is interest rate risk.
4. Credit risk. Fixed-income funds mainly invest in various bonds, and if the issuer defaults, it will bring credit risk.
The above are some contents about the fixed-income fund, so you can pay attention to it.