1. Bonds are creditor's rights and debt certificates issued to investors when the government, financial institutions, industrial and commercial enterprises and other institutions directly borrow money from the society to raise funds, and promise to pay interest at a certain interest rate and repay the principal according to the agreed conditions.

2. Bond funds mainly invest in government bonds, financial bonds and corporate bonds, but a small part of them also invest in the stock market. Bond funds pool investors' funds and make portfolio investments in bonds to obtain income. The biggest feature of bond funds is the safety of funds, and users can get very stable income by holding them for a long time.

Influencing factors of bond funds

1. There are two main factors that affect the performance of bond funds. One is interest rate risk, that is, the sensitivity of the bonds invested to interest rate changes (also known as duration), and the other 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.

2. 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.

3. The longer the duration, the more sensitive the net asset value of bond funds is to the change of interest. If the duration of the bond fund is 5 years, if the interest rate drops 1 percentage point, the net asset value of the fund will increase by about 5 percentage points; Conversely, if the interest rate rises by 1 percentage point, the net asset value of the fund will lose 5 percentage points. For another example, there are two bond funds with a duration of 4 years and 2 years respectively, and the net asset value of the former fluctuates about twice as much as that of the latter.