All pure bond funds are used to invest in bonds The term of bonds varies. According to the term of bonds, pure bond funds can be divided into: 1. short-term bond funds; 2. Medium and long term bond funds.
But how can we judge whether bonds are short-term bonds or medium - and long-term bonds? The bond interest rate and risk exposure held by the bond fund will be introduced in the regular annual report of the bond fund. There will be an explanation of the average duration of bonds held by the bond fund.
short-term bond: Most of the bonds held have a maturity of less than one year;
Medium and long-term bonds: The maturity time of bonds held is more than 1-5 years.
Characteristics of short-term debt fund: The average return is 3-4%, higher than that of the monetary fund. It is suitable for managing funds that will not be used for 6 months to 1 year.
Features of medium and long term bond funds: The average return is 6-7%, higher than that of short-term debt funds. It is suitable for managing funds that are not used for one to three years.
What does short-term debt mean?
The short-term bond fund is a relatively small variety, which coincides with the positioning of the monetary fund. The income of the short-term bond fund is slightly higher than that of the monetary fund, and the income of the monetary fund will not decline, but the short-term bond fund will decline. Therefore, the attraction of short-term debt funds to ordinary investors is not strong. Short term bond funds mainly invest in bonds maturing within one year. Even if there is fluctuation, the fluctuation is relatively small and the decline is not large. Generally, we will not lose money after holding short-term debt funds for more than 6 months.
There is no subscription and redemption fee for short-term bond funds, but sales service fees will be charged and deducted directly from the backstage. At present, there are few types of short-term debt funds in China, and short-term debt funds and monetary funds have similar returns, but there is a risk of decline. Therefore, compared with monetary funds, investment is not recommended.
What does the medium and long term bond fund mean?
There are many medium and long term bond funds on the market, but the homogenization of medium and long term bond funds is very serious. The difference in fund returns is not significant, and the difference in annual returns is within 1%. Generally, the medium and long term bond funds are relatively stable in dividend distribution, because almost all bonds have interest income, and the bond fund will distribute it in the form of dividend. However, the dividend of medium and long term bond funds is not comparable to that of index funds, so we only consider investing in medium and long term bond funds under the following two circumstances:
1. There is no undervalued index fund to choose from;
2. There are funds that will not be used in 1-3 years to take care of.
It should be noted that the medium and long term bond funds themselves are volatile, and the buying yield will be good when they need to be underestimated
