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Bond Funds

Bond Funds. By: Keanu Hoohuli. Definition .

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Bond Funds

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  1. Bond Funds By: Keanu Hoohuli

  2. Definition A bond fund or debt fund is a fund that invests in bonds, or other debt securities. Bond funds typically pay periodic dividends that include interest payments on the fund's underlying securities plus periodic realized capital appreciation. Bond funds typically pay higher dividends than Collectables and money market accounts. Most bond funds pay out dividends more frequently than individual bonds

  3. Disadvantage • With a Bond Fund you have to pay a fee and often the fee is a percentage of the total investment amount. • Bond Funds cannot be fixed because an individual held bond can potentially fluctuate. • The Net Asset Value (NAV) of a bond fund may change over time, unlike an individual bond in which the total issue price will be returned upon maturity (provided the bond issuer does not default).

  4. Making money • You get paid interest income from the bonds held by the fund. You can take this income in the form of more units of the fund or cash distributions. The more units of the fund you hold, the more income you get. • If the Price for the bond fund goes up you gain money

  5. Who invests • People who take average risk while investing should use this because the risk isn’t too high and you still make a good amount of money

  6. Price • Bond Funds are different prices depending on what kind you get • Often time the fee is a small percentage of how much you earn

  7. Risks • Bond funds have :interest rate, credit, market, liquidity, foreign investment (or country risk), foreign exchange risk, leverage and management risk. • Bond funds are still a safe choice

  8. Companies • Government uses bond funds quite heavily • Mortgage uses bond funds as well

  9. Urls • http://www.investopedia.com/articles/mutualfund/05/062805.asp#ixzz25TpNJ4np • http://en.wikipedia.org/wiki/Bond_fund • http://www.finra.org/Investors/SmartInvesting/AdvancedInvesting/EvaluatingPerformance/

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