What are the characteristics of bond funds?

How to choose?

Nowadays, more and more investors are beginning to enter the fund market and choose financial products that suit them.

For many investors, currency is a good choice. However, in recent years, its returns have deteriorated, and investors have quietly turned their attention to bond funds.

So, what are the characteristics of bond funds, and how should you choose and buy them?

What are the characteristics of bond funds?

1) Low risk, low return.

Bond funds invest in bonds and are less risky than stock funds.

The income is better than that of money funds, the possibility of principal loss is smaller, and the rate of return is not high, which means lower income.

Its income is also relatively stable.

The fund invests in bonds, earns regular interest returns, and promises to repay the principal and interest upon maturity.

2) Good liquidity.

Bond funds are not limited by time when conducting operations such as transfer and redemption, and have flexible turnover.

3) The cost is lower.

Since bond investment management is relatively simple, its management fees are relatively low.

4) Pay attention to current income.

Bond funds actively pursue relatively fixed income in the current period. Compared with stock funds, they lack the potential for appreciation and are more suitable for steady investors who are unwilling to take too many risks and seek stable income in the current period.

5) Long-term investment and financial management model.

Like other funds, if bond funds want to obtain higher returns, investors need to hold them for a long time before the returns will be more obvious.

So, how to choose bond funds?

In my country's investment market, the main investment entities of bond funds are treasury bonds, financial bonds and corporate bonds.

Treasury bonds are bonds issued by the state credit and have high creditworthiness. There has never been a default on treasury bonds in our country, but the yield is too low.

Financial bonds are bonds issued by banks or non-bank financial institutions. The creditworthiness of banks is also good, and the creditworthiness of financial institutions is relatively high.

Corporate bonds are bonds issued by companies with good credit. They carry certain risks. Once they encounter a credit crisis, they may lose their principal.

From the perspective of entities, the level of returns among the three is corporate bonds > financial bonds > treasury bonds, while the risk levels of the three are corporate bonds > financial bonds > treasury bonds.

To sum up, it is more appropriate for bond funds to invest in financial bonds.