Bond funds refer to funds that specialize in investing in bonds. They pool the funds of many investors and invest in bonds to seek relatively stable returns.

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

As a portfolio investment vehicle that invests in a basket of bonds, there are important differences between bond funds and individual bonds.

1. Investment risks vary. As the maturity date approaches, the interest rate risk borne by a single bond will decrease.

Bond funds do not have a fixed maturity date and the interest rate risk they bear will depend on the average maturity of the bonds held.

The average maturity dates of bond funds are often relatively constant, and the interest rate risk that bond funds are exposed to usually remains at a certain level.

The credit risk of a single bond is relatively concentrated, and bond funds can effectively avoid the higher credit risks that a single bond may face through diversified investments.

2. Bond funds have no definite maturity date. Unlike general bonds, which have a definite maturity date, bond funds are composed of a group of bonds with different maturity dates, so they do not have a definite maturity date.

However, in order to analyze the characteristics of bond funds, we can still calculate an average maturity date for all the bonds held by the bond fund.

3. The income of bond funds is not as good as the interest of bonds. Fixed investors who buy fixed-rate bonds will receive fixed interest income regularly after purchase, and can recover the principal when the bond matures.

As a combination of different bonds, bond funds will distribute income to investors regularly, but the income distributed by bond funds fluctuates and is not as fixed as the interest on bonds.

4. The yield of a bond fund is more difficult to predict than the yield of a single bond bought and held to maturity. The yield of a single bond can be calculated based on the purchase price, cash flow, and principal recovered at maturity.

However, bond funds are composed of a group of different bonds, and the yield is difficult to calculate and predict.

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