Usually, bond funds are the most important fixed-income products. Bond funds are funds with fixed-income financial instruments such as government bonds and financial bonds as their main investment targets. Investors can get fixed income in a specific period of time and know the amount and time of income in advance. So, what are the advantages and disadvantages of bond funds?

The advantages and disadvantages of bond funds are as follows:

1 Advantages of bond funds

Bond funds have the advantages of low risk and strong liquidity. By investing in different bonds, bond funds can effectively reduce the risks that investors may face when investing in a certain bond. And indirectly investing in bonds through bond funds can obtain higher liquidity and can transfer or redeem the bond funds held at any time.

2 shortcomings of bond funds

First of all, only if you hold it for a long time can you get a relatively satisfactory return. Then, when the stock market soared, the income remained stable at the average level, which was lower than that of equity funds. When the bond market fluctuates, there is even the risk of loss.

Generally speaking, many bonds are illiquid, and investors may have to hold them until they realize their earnings at maturity. By indirectly investing in bonds through bond funds, high liquidity can be obtained, and the bond funds held can be transferred or redeemed at any time.