1. Interest rate risk: If the national monetary policy is tightened and the deposit reserve interest rate is continuously raised, the bond market will be suppressed to some extent, thus affecting the trend of bond funds.
2. Credit risk: that is, if the bond issuer fails to pay the interest rate of the bond, the fund will also lose money.
3. In addition, bond funds may also face liquidity risk, that is, when the central bank's monetary policy is tightened, the market liquidity is temporarily tight and bonds cannot be exchanged, which will also make bond funds have certain risks.
Although bond funds have the above risks, they generally do not appear. Because bonds are based on the issuer's credit, if they are not paid, no investors will believe them in the future, so this is also the reason why the bond fund's income is relatively stable.
The risk of bond funds is a little higher than that of money funds, but generally speaking, the risk is small and the income is stable, which is very suitable for conservative investors. Bond fund is a relatively low-risk financial product, and the investment target is bonds, so as long as bonds have risk attributes, bond funds will have them.
For bonds, the main risks come from two aspects:
One is interest rate risk and the other is credit risk.
(1) Credit risk. Because the underlying assets of bond funds are still bonds, it is necessary to know the bond allocation of funds when choosing bond funds. This information can be obtained through the product information announcement of bond funds.
There are many kinds of bonds in China, which can be roughly divided into national debt, financial debt and corporate (enterprise) debt. The credit risk level of bond funds with different bond types is different. For example, the credit risk of bond funds of national debt and China Development Bank bonds is much lower than that of corporate bonds, and the credit risk of corporate bonds with different credit ratings is also different. Of course, bond funds with different credit risks have different returns. Therefore, we must understand the specific bond allocation of bond funds and make choices according to our own risk preferences.
(2) Interest rate risk. Because bond funds are valued by market value method, the net value of bonds is not only affected by the interest income of bonds held by them, but also by the overall bond market trend.
Theoretically, the fair value of a bond depends on the present value of its future cash flow. When the market interest rate rises, the present value of bonds falls. When the market interest rate decreases, the present value of bonds increases. Therefore, the market price and market interest rate of bonds show the characteristics of reverse fluctuation.
The underlying assets of bond funds are bonds, so the investment of bond funds is essentially an investment in the trend of market interest rates. Once the market interest rate rises sharply, the net value of bond funds will decline, and it is necessary to bear the risks brought by interest rate changes. If the fund manager fails to correctly judge the future interest rate trend, after buying a large number of bonds, the market interest rate will continue to rise, which will lead to a continuous decline in the fund's net value. Then, for investors, if they invest in bond funds at this stage, the rate of return will be less than expected, and even investment losses will occur.
Therefore, the timing of bond fund investment is very important, and it is necessary to prevent and control interest rate risks. As an ordinary investor, on the one hand, with the help of the professional investment and research ability of fund practitioners and the prediction of the market, at the same time, it is necessary to strengthen the understanding and analysis of the national macroeconomic situation, monetary policy, industry credit environment, etc., and improve their investment decision-making ability.