When the market fluctuates greatly, the risk of fund investment will be great, and the return rate of some high-risk and high-yield funds may not be very stable, so some investors may prefer to invest in stable funds at this time, that is, to bring development opportunities to fixed-income funds. So what's the difference between fixed income funds and other types of funds? Let's get to know it together!
The difference between fixed income funds and other types of funds
The difference between fixed income funds and other types of funds mainly lies in the investment target and risk-return characteristics. Here are some common differences:
Investment target: Fixed-income funds mainly invest in fixed-income assets, such as bonds, time deposits and money market instruments. Other types of funds can invest in stocks, real estate, commodities and other asset classes.
Risk-return characteristics: Fixed-income funds usually have low risk level and relatively stable returns, which are suitable for investors who pursue relatively conservative returns. Other types of funds have diversified risk and income levels, and may have greater volatility and potential income.
Source of income: The income of fixed-income funds mainly comes from fixed interest, bond coupon rate or dividend income. The income of other types of funds is obtained in different ways, such as stock price rise, real estate rental income or commodity price fluctuation.
What are the benefits of fixed income funds?
Stable income: Fixed-income funds invest in fixed-income assets with relatively stable interest income, which can provide a relatively stable income level and reduce investment risks.
Risk diversification: Fixed-income funds usually diversify their investments into a variety of bonds or other fixed-income assets, thus diversifying risks. This diversification helps to reduce the impact of default or other risks of specific bonds on the portfolio.
Liquidity: Fixed-income funds usually have good liquidity, and investors can easily buy and sell fund shares.
What is a fixed income fund?
Fixed-income funds refer to some funds with fixed investment income. Mainly invest in fixed-income products such as bonds and monetary assets. Holding a fixed-income fund is equivalent to becoming an investor who issues such funds, and the income is relatively fixed, especially for money funds.
Fixed income funds have high stability. It will invest most of its funds in assets with fixed income, such as government bonds and bank deposits. The risk is low, which also ensures the stability of income.
Fixed-income funds have higher returns. Fixed-income funds will use funds to invest in products with higher risks and get higher returns under higher risks. It requires users to hold it for a long time, and it is difficult to obtain higher returns in the short term.
Is there any risk?
There are risks. Any fund will have certain risks, just saying that there are big and small. Fixed-income funds are not completely risk-free, only that the risk will be lower than other types of risks.
Fixed income funds generally refer to money funds and bond funds. The risk is relatively small, but there is also the possibility of loss, but the probability of loss is very small and there is no guarantee.
Among them, the money fund mainly invests in the money market, such as deposits, certificates of deposit, short-term bonds and central bank bills. The bond fund mainly invests in the bond market, that is, the fund mainly invests in a basket of bonds, and the risk and income of the fund are determined by the bonds invested.
What are the advantages of "fixed income+"fund?
First of all, the stability of "fixed income+"funds is relatively high. The "fixed income+"fund invests most of its funds in assets with fixed income such as government bonds and bank deposits. These assets have low risk and stable income, thus ensuring the relatively high stability of "fixed income+"funds.
Secondly, there is a relatively high income. The "fixed income+"foundation invests a small amount of funds in equity assets such as stocks to obtain higher returns and avoid the situation of low returns due to holding fixed income assets.