Last section, we introduced the Monetary Fund. Today, let's learn about bond funds.

Bond fund and its characteristics

Bond funds refer to fund products invested in bonds. When the government, enterprises or financial institutions need to raise funds, they will issue some bonds to investors and agree on the repayment date and interest rate.

Generally speaking, bond funds have better returns than money funds, but their risks are also higher than money funds.

The main investment direction of bond funds:

national debt

National debt is a creditor-debtor relationship based on national credit and in accordance with the general principles of bonds, which is formed by raising funds from the society. Compared with bonds issued by other institutions, national debt has the characteristics of good security, strong liquidity and stable income.

Credit debt

Credit bonds refer to bonds that are not guaranteed by assets of any enterprises or institutions. The risks are relatively large, but the benefits are generally high.

convertible bonds

Convertible bond is a kind of corporate bond, which can be converted into common stock under certain conditions.

Other targets

Conduct subscription of new shares, warrant trading and a small amount of stock and securities investment. Of course, these targets account for a small proportion in the whole bond fund, and it is generally difficult to have a great impact on the net value of bond funds.

Influencing factors and investment strategies of bond fund income

Factors affecting the return of bond funds

Interest rate factor

Generally speaking, the overall income of bond funds is inversely proportional to the interest rate. As interest rates rise, bond fund returns will be low; On the contrary, when interest rates fall, the income of bond funds will go up.

Credit factor

The profit basis of bond funds is that all kinds of bonds they hold can get principal and interest on time. During this period, if the bond issuer defaults, the income of the bond fund may decrease. If the bonds with heavy positions in the bond fund default, it may have a significant impact on the principal of investors.