1, bond interest.
Bond holding will bring interest income after maturity, which is a relatively stable source of income in bond funds. According to the credit rating and maturity of bonds, the benefits brought by bonds are different. Generally speaking, the higher the credit rating, the lower the risk, the lower the interest rate and the less the income. The longer the term, the higher the interest rate and the higher the income. Therefore, investors can choose to invest in bond funds with more long-term bonds if they want to get higher returns.
2. Bond bid-ask spread.
Bonds can be traded in the secondary market, and the price of bonds will be affected by market interest rate, credit rating of bonds, maturity and other factors, and will fluctuate upward or downward, so you can earn profits by buying low and selling high. After the income is realized, you can continue to invest in new high-interest bonds and continue to earn high interest.
3. Bond repurchase.
Bond funds can buy bonds with higher interest rates through repurchase business, with the bonds they hold as collateral, and earn higher returns. Bond funds do leveraged trading through this bond repurchase, which can effectively amplify the income. However, leveraged trading is risky and requires careful operation, otherwise it is likely to lose money. At present, the leverage ratio in Public Offering of Fund is limited to: the leverage ratio of general open-end funds cannot exceed 140%, while the leverage ratio of closed-end funds can reach 200% in the closed period.
4. Income from stock investment.
On the basis of investing in fixed-income wealth management products, tier-one bond funds can also invest in bonds and new shares in the primary market, but they do not participate in stock trading in the secondary market. On the basis of investing in fixed-income wealth management products, secondary bond funds can not only participate in the trading of stocks in the secondary market, but also participate in the investment of new shares in the primary market. In this way, secondary bonds can obtain excess returns by participating in stock investment, but at the same time they also bear the risks in the stock market.
Risks of bond funds:
1, interest rate risk. Bond prices are affected by fluctuations in market interest rates. Market interest rates rose and most bond prices fell; Market interest rates fell and most bond prices rose. Generally speaking, the longer the maturity of bonds, the greater the impact of market fluctuations on bond prices. By analogy, bond funds take bonds as their main investment targets, and their value is also affected by market fluctuations. The longer the maturity of bond funds, the greater the impact of market fluctuations.
2. Credit risk. Credit risk refers to the risk of default by bond issuers. If the issuer's economic situation is not good, and he can't pay interest or accept the due bonds on time, the bonds will face higher credit risk. If bond rating agencies's credit rating of a bond becomes lower, the bond fund holding the bond assets will be affected by credit risk, resulting in a decrease in the net value of the fund.
3. Early redemption risk. If the issuing company is in good operating condition or has financing channels with low interest rates, it may repay high-interest bonds in advance. Funds holding early redemption bonds will not only be unable to obtain high-interest income, but will also face the risk of reinvestment.
4. Inflation risk. Inflation will reduce the purchasing power of money, and the value of money will also decrease. Investors in bond funds should not ignore the influence of inflation, but should allocate their portfolios to make the rate of return outperform the inflation rate.