Interest rate risk Interest rate risk refers to the risk that changes in interest rates will cause changes in bond prices and yields.

2. Price change risk: Bond market prices often change. If its changes are inconsistent with investors' predictions, investors' capital will inevitably suffer losses.

3. The interest or principal repayment that the issuer of inflation-risk bonds promises to pay to bondholders in the agreement is a fixed amount agreed in advance.

When inflation occurs and the actual purchasing power of money decreases, the things that can be purchased in the market will be relatively reduced, and the purchasing power may even be lower than the original investment amount.

4. Credit risk In the investment of corporate bonds, there is a risk that the enterprise cannot fully fulfill its responsibilities due to various reasons.

5. Transfer risk When investors are eager to transfer the bonds in their hands, sometimes they have to discount the price or pay a certain commission.

6. Recovery risk Bonds with recovery clauses often have the possibility of forced recovery, and this possibility is often when market interest rates fall and investors receive actual incremental interest based on the nominal interest rate on the bond face. Investors

expected returns will be lost.

7. Tax risk: The government's tax reduction or increase on bonds will affect investors' investment returns on bonds.

8. Policy risk refers to the risk arising from fluctuations in bond prices due to policy changes.

Bond funds are the most important type of fixed income product. The definition of fixed income is that investors can obtain fixed income within a specific period of time and know the amount and time of income in advance.

In a narrow sense, fixed-income varieties mainly refer to bonds, but now they also generally refer to various debt-related financial derivatives.

Bond funds are funds whose main investment objects are fixed-income financial instruments such as government bonds and financial bonds.

Generally speaking, the proportion of funds invested in bonds should account for more than 80% of total assets.

So, why do we not buy bonds directly, but buy bond funds? The first reason: lower risk.

When individuals purchase bonds, they may be exposed to the risks associated with a particular bond.

By investing in a portfolio of different bonds, bond funds can effectively reduce the risks that individual investors may face if they directly invest in a certain bond.

The second reason: expert financial management.

As the types of bonds become increasingly diversified, ordinary investors who want to invest in bonds must not only carefully study the bond-issuing entities, but also judge macroeconomic indicators such as interest rate trends, which is often beyond their capabilities. However, investing in bond funds is convenient and worry-free, and you can also enjoy professional services.

Investment services.

The third reason: strong liquidity.

Many bonds are illiquid, and investors are likely to have to hold them to maturity before they can realize their earnings.

By investing indirectly in bonds through bond funds, you can obtain high liquidity, and the bond funds you hold can be transferred or redeemed at any time.

It can be seen that investing in bond funds has many advantages over investing directly in bonds.

According to big data statistics, from 2007 to 2017, the average return rate of bond funds was 8.05%, which was significantly higher than bank financial management and money funds. There are many types of bond funds. If you want to invest well, you first need to understand the characteristics of bond funds.

Classification.