Convertible bond fund
Convertible preferred stock, so it is also called convertible fund. As the name implies, convertible bonds are convertible corporate bonds, that is, bonds can be converted into stocks (benchmark stocks) of enterprises that issue convertible bonds at a specified conversion price within a specified period of time. Investors who hold convertible bonds can convert bonds into stocks during the conversion period, or sell convertible bonds directly in the market for realization, or choose to hold bonds at maturity and collect principal and interest.
Convertible bond fund is a special fund product, and the proportion of convertible bonds invested by convertible bond funds is generally around 60%, which is higher than that of bond funds.
Risks of convertible bond funds
Although convertible bonds are bonds, they also have risks.
1. Interest rate risk: There is interest rate risk in convertible bonds, and the value of convertible bond funds will decrease with the downward interest rate.
2. Risk of stock price fluctuation: Convertible bond funds include stock index options, which may be affected by stock market price fluctuation. When the stock price soared, the price of convertible bonds rose accordingly; When the stock price falls, the price of convertible bonds will also fall.
3. Market risk: Generally speaking, there are not many types and quantities of convertible bonds in China, and the liquidity is not very high, which will lead to the failure to smoothly convert convertible bonds funds and cause risks.
The above is about the risks of convertible bond funds, and I hope it will help you. Warm reminder, financial management is risky and investment needs to be cautious.