What is a pure bond index fund? Which is better? Reasons for the loss of pure bond funds
Pure bond fund:
Pure debt fund is a fund that specializes in investing in bonds. Bonds are issued by enterprises and countries, and they all have a characteristic: they have a certain term, and the principal and interest are returned at maturity, and the interest is higher than that of bank deposits. Therefore, the risk of buying a pure debt fund is not great, and its biggest risk is that it cannot keep up with the pace of inflation. Therefore, pure debt funds are safer than other funds.
Dividend method of pure debt fund:
Most fund companies offer cash dividends and dividend reinvestment for investors to choose from. Investors choose to pay dividends in cash, and the dividends will be transferred from the fund custody account to the bank deposit account designated by the investors on the dividend payment date; Dividend reinvestment is a service provided by fund management companies to investors. The dividend obtained is directly reinvested in the fund, which is equivalent to the distribution of expected annualized expected income by listed companies in the form of stock issuance. If investors don't need cash for the time being, they can choose dividend reinvestment. In this case, the dividend funds will be converted into corresponding fund shares and credited to the investor's account, and the reinvestment fee is generally exempted.
For closed-end funds, due to the fixed fund share, the expected annualized expected income distribution can only be in the form of cash, and so is ETF.
Tip:
Although the risk of pure debt fund is very low, it may also lose money in extreme cases. For example, in the bond market in the second half of 20 13, pure debt funds basically lost money, and some heavily leveraged debt bases even lost about 7 points. If friends buy such varieties, they should pay close attention to the changes in the bond market and the net value of funds.
Although LOF debt base can be traded in the secondary market, it is basically a stagnant pool and cannot be bought and sold in large quantities. Therefore, the investment method is still based on on-site redemption. Friends who plan to arbitrage at a discount and premium should not choose this variety, so as not to waste time, energy and money.