1, interest rate risk
The coupon rate of bonds is fixed, but the price of bonds will rise and fall due to market interest rates and other factors. When the market interest rate rises, investors tend to buy higher newly issued bonds in coupon rate, so the original bond issuance can only increase its new attraction by lowering the price. When the bond price falls more than the interest of the day, the net value of the pure debt fund will also fall.
When the market interest rate goes down, in order to reduce the financing cost, the interest rate of newly issued bonds is usually lower, so the original bonds will be more popular in the market and the price will rise.
2. The broker defaults.
Although there are strict conditions for the issuance of bonds, because enterprises are responsible for their own profits and losses, there may still be a risk of default in corporate bonds, that is, brokers cannot pay as promised after holding expires. Once the broker defaults, the value of the bond will also plummet.
Credit rating is an important indicator to measure the default risk of corporate bonds. The higher the credit rating, the better the qualification and the lower the risk of default. The lower the credit rating, the higher the default risk of companies with general qualifications. But under the same term, the higher the credit rating, the lower the expected rate of return, and vice versa.
Overall, the risk of pure bond funds is relatively low. Paying more attention to the information such as the background of the fund company and the size of the fund can effectively reduce the investment risk. The above contents about the loss of pure debt foundation hope to help everyone. Warm reminder, financial management is risky and investment needs to be cautious.