Bond funds: the "ballast stone" for stable financial management
Bond funds invest over 80% of their funds in the bond market, making portfolio investments based on the issuer, maturity, credit rating, and other factors. During periods of economic downturn and low interest rates, bond prices often rise and bond fund returns perform outstandingly. For example, in 2022, due to macroeconomic factors, the stock market fluctuated, and some high-quality bond funds had annual returns exceeding 5%. The sources of income for bond funds include bond interest income, bid ask spreads, and leverage operation returns. However, it also faces interest rate risk, as when market interest rates rise, bond prices will fall, thereby affecting the net asset value of the fund. According to the types of investment bonds, bond funds can be further divided into pure bond funds, primary bond funds, and secondary bond funds. Pure bond funds only invest in bonds, while primary bond funds can participate in the subscription of new shares in the primary market. Secondary bond funds can also buy and sell stocks in the secondary market, and investors can choose according to their own risk preferences. Bond funds are often used as a robust component in asset allocation to balance portfolio risk.
