I started investing and managing money for the first time, and I was a bit confused about bonds and bond funds, let alone the difference between the two.

Both are bond investments. In fact, the difference between the two is quite big.

Bond Fund: Commonly known as bond fund, it is a fixed income fund.

They are funds raised collectively by many investors. Compared with stock funds, bond funds have less risk, more stable returns, and lower management fees. They are suitable for investors who are stable in the medium and long term.

What is the difference between debt funds and bonds?

1The investment risks are different.

As a single bond approaches its maturity date, the interest rate risk decreases.

The bond base has no definite maturity date, and the risk assumed depends on the average maturity date of the bonds held. The average maturity date of the bond base is relatively fixed, and the interest rate risk of the bond base will also be at the same level.

From the perspective of credit risk, the credit risk of bonds is concentrated, and bond bases directly face and concentrate risks through diversified investments.

2The benefits are different.

A single bond has a fixed maturity date and a fixed interest rate, and the yield can then be calculated based on the purchase price and cash flow.

A debt base is a combination of different bonds. Investors will also receive regular income, but the income will be high or low, so it will be more difficult to calculate the rate of return.

3Expiration dates are different.

The maturity date of a bond is determined, but the bond base is a group of bonds with different maturity dates, so the maturity date cannot be clear.

4The ownership relationship is different.

Bonds are a debt-debt relationship, and debt funds are trust relationships between investors and fund managers.

What types of debt funds are there?

Debt funds include standard bond funds and ordinary bond funds (primary and secondary.) Standard bond funds are pure bonds and only invest in the bond market.

The first-level general bond fund is used for bond investment and new stocks in the primary market of the stock market.

Secondary general bond funds are used for bond investment and stock market secondary market investment.

Some debt funds are followed by ABC, which describes the different forms of handling fees.

A debt fund has ABC: A, front-end charges; B, back-end charges; C, no subscription fee, but there will be daily accrued sales service fees. A debt fund has only AB: A, there is a subscription fee, B, there is no subscription fee

Subscription fee.

How to choose a debt fund? Investing in debt funds is suitable for investors who do not like high risks and can have stable returns.

Therefore, it is best to choose medium and long-term investment periods for debt-based investments. If the holding period is too short, losses may occur when the market is not good.

You also need to have some knowledge about how to understand and choose debt funds.

For example: the classification of debt bases, choosing your own debt base based on risks, transaction costs and judgment of the market environment.

Debt-based investments do not offer high returns.

Can be combined with other stock funds for investment.