Bond funds, also known as bond funds, refer to funds that specialize in investing in bonds. They pool the funds of many investors and invest in bonds to seek relatively stable returns.

According to the China Securities Regulatory Commission’s classification standards for fund categories, bond funds are those with more than 80% of fund assets invested in bonds.

Bond funds can also invest a small portion of their funds in the stock market. In addition, investing in convertible bonds and new shares are also important channels for bond funds to obtain income.

Bonds are credit and debt certificates issued to investors when governments, financial institutions, industrial and commercial enterprises and other institutions directly borrow money from society to raise funds, and promise to pay interest at a certain interest rate and repay the principal according to agreed conditions.

The essence of a bond is a certificate of debt, which is legally binding.

The relationship between bond buyers and issuers is a creditor-debt relationship. The bond issuer is the debtor, and the investor (or bondholder) is the creditor.

1 In China, the investment objects of bond funds are mainly treasury bonds, financial bonds and corporate bonds.

Generally, bonds provide investors with fixed returns and principal repayment at maturity, with lower risks than stocks. Therefore, compared with stock funds, bond funds have the characteristics of stable returns and lower risks.