In fact, it is common for bond funds to rise after a sharp fall. However, this does not mean that bond funds will rise every time they plummet, because there are many reasons for the rise and fall of bond funds, involving macroeconomic environment, monetary policy, interest rate trends, bond issuance and other factors.
First of all, we need to recognize the characteristics of bond funds. Bond funds mainly invest in fixed-income products, such as government bonds, corporate bonds and short-term financing bills. Unlike the stock market, the performance of the bond market is mainly influenced by macroeconomic and monetary policies. When the economy is in a downturn, the central bank usually stimulates economic growth by lowering the benchmark interest rate and increasing liquidity. Doing so will lead to an increase in bond prices, thereby increasing the net value of bond funds. On the contrary, in the period of rapid economic growth and high inflation, the central bank may take measures to raise interest rates, which will lead to a decline in bond prices, which in turn will lead to a decline in the net value of bond funds.
Secondly, it should be noted that the relationship between supply and demand in the bond market will also affect the rise and fall of funds. For example, a large number of bonds issued by the government will increase the supply of the bond market, which will lead to a decline in bond prices. On the contrary, when the market demand increases, the bond price will rise. In addition, for bonds with low credit rating, the market risk is greater. If the bond issuer can't meet the financing demand, this will lead to a decline in bond prices, which in turn will lead to a decline in the fund's net value.
Then, based on the above analysis, how to deal with the sharp decline of bond funds? The following suggestions are for your reference.
First of all, understand the macroeconomic environment and monetary policy changes in the bond market. This will help to judge the future trend of bond prices and market demand.
Second, choose funds of fund management companies with good reputation and stable management team. This can reduce the credit risk and management risk.
Third, before investing in bond funds, you need to rationally evaluate your risk tolerance, so as to correctly grasp the investment opportunity and leave when the market is hot.
In a long time span, bond market and bond fund are valuable investment tools. The steady performance of bonds will be transformed into a reasonable proportion with our age, income and other professional stages through accurate market entry trends, which will bring wealth management benefits.