What is the difference between pure debt funds and ordinary bond funds?
Pure debt fund refers to a fund that only invests in the bond market and does not participate in investing in the stock market or other markets. Pure debt funds are generally divided into short-term pure debt funds and medium and long-term pure debt funds. The remaining maturity of the bonds they invest in is different, and the returns and fluctuations are also different. The term of bonds invested by short-term pure debt funds is generally less than one year, and the yield is low, but the volatility is also small. The term of bonds invested by medium-and long-term pure debt funds is generally more than one year, and the yield is high, but it is also volatile.
Ordinary bond funds refer to funds that mainly invest in the bond market, but also have a certain proportion of funds invested in the stock market or other markets. Generally speaking, more than 80% of their funds are invested in bonds. Ordinary bond funds can be divided into one type of bond funds and two types of bond funds.
Which is better?
There is no absolute answer as to which is better, pure debt fund or ordinary bond fund, which depends on investors' own risk preference, investment objectives and investment cycle. If investors are sensitive to risks and want to obtain stable and reliable returns, then pure debt funds may be more suitable. Pure bond funds are mainly affected by interest rate changes, credit risk, liquidity risk and other factors, and their performance is more stable than that of ordinary bond funds.
If investors have high risk tolerance and want to get higher and flexible returns, then ordinary bond funds may be more suitable. While investing in the bond market, ordinary bond funds can also increase the possibility of income through the stock market or other markets.