Debt-based risk is not high. Money fund is an open-end fund, which only invests in the money market, such as short-term government bonds, bills and bank deposits. And it is a low-risk investment variety, so the natural income is also very low; Bond funds, as the name implies, invest in various bonds. Compared with money funds, bond funds are risky and have relatively high returns. But at the same time, bond funds are fixed-income investments, even if the fluctuation is so short, it has nothing to do with you.
Bond risk: interest rate risk and credit risk. Interest rate risk refers to the rise of risk-free interest rate and the decline of bond price. Credit risk is that bonds may not be able to repay loans. How is the yield of bond funds generated? Monetary fund is the least risky bond strategy. Money funds can only buy AAA bonds and government bonds, which means that the credit risk is low. The average remaining maturity of bonds does not exceed 180 days, which means that the interest rate risk is low. Because the risk is low and the return is low. If the rate of return is higher than that of the money fund, it is bound to bear greater risks, mainly in the following aspects: increasing interest rate risk, increasing credit risk and increasing leverage to improve the rate of return.
Now the bank has reduced the interest rate to 3%. Then investors said, hey, now banks are 3% and bonds are 5%. Bonds are still the same bonds, and the risks are still the same. The risk compensation is now 2%. On the other hand, the interest rate is low, but the bond yield remains unchanged. Of course, this reinvestment is to buy bonds, so some investors will invest in bonds from bank deposits. Until the bond price rose from $65,438+000 to $65,438+000.96, the deposit interest rate was 3%, and the bond yield was 4%, which returned to an almost balanced state, and the bond interest rate was 65,438+0% higher than the bank interest rate. In short, when interest rates fall, bond prices will rise.
In turn, the bank raised the interest rate from 4% to 5%. At this time, investors will think, hey, the bond interest rate is the same as the bank interest rate, the bond may default, and the bank deposit is safer. So, if I had to choose between the two, I would definitely choose a bank account. So some funds will be transferred from bonds to bank deposits. Then the bond price will drop until it reaches about $99.06. At this time, yield to maturity will rise to 6%, which is higher than the bank interest rate 1% and return to equilibrium. In short, higher interest rates lead to lower bond prices.