25:
167:), which are corporate bonds carrying a higher risk, due to the potential inability of the issuer to repay the bond. Bond funds specializing in junk bonds – also known as "below investment-grade bonds" – pay higher dividends than other bond funds, with the dividend return correlating approximately with the risk.
187:
Like stocks, the price of high-yield bonds is subject to fashion. For example, in late 2008, many high-yield bond funds were priced at 70 cents on the dollar. In fact, there were few bond defaults and the price recovered. Due to the lower price, investors sold out of high-yield bond funds, having a
196:
Funds invest in different maturities of bonds. This may be described by terms like "short", "intermediate", and "long". This affects how the fund value changes with interest rates. Funds invested in longer bonds will have more change. As a general rule, the yield for longer bonds is higher.
279:
Price charts on bond funds typically do not reflect their performance due to the lack of yield consideration. To accurately evaluate a bond fund's performance, both the share price and yield must be considered. The combination of these two indicators is known as the total return.
200:
Bond funds usually have a target length, such as five to ten years. Thus over time, they need to sell shorter bonds and buy longer bonds to stay in range. A bond fund with such a target length will never "mature" like a specific bond. Some UITs own bonds with a specific maturity
183:
An important property of bond funds is the rating of the bonds they own. Funds may be rated from high to low credit quality. The quality of a fund is the average of the bonds owned by the fund. Funds that pay higher yields typically own lower quality bonds.
223:: Bond funds invest in many individual bonds, so that even a relatively small investment is diversified—and when an underperforming bond is just one of many bonds in a fund, its negative impact on an investor's overall portfolio is lessened.
163:: Bonds are issued by corporations. All corporate bonds are guaranteed by the borrowing (issuing) company, and the risk depends on the company's ability to pay the loan at maturity. Some bond funds specialize in high-yield securities (
147:: In the United States, these are bonds issued by government agencies such as the Government National Mortgage Association (Ginnie Mae), Federal Home Loan Mortgage Corp. (Freddie Mac), and Federal National Mortgage Association (
217:: Fund managers provide dedicated management and save the individual investor from researching issuer creditworthiness, maturity, price, face value, coupon rate, yield, and countless other factors that affect bond investing.
157:: Bonds issued by state and local governments and agencies are subject to certain tax preferences and are typically exempt from federal taxes. In some cases, these bonds are even exempt from state or local taxes.
254:
Bond fund dividend payments may not be fixed as with the interest payments of an individually held bond, leading to potential fluctuation of the value of dividend payments.
434:
264:
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).
114:
that include interest payments on the fund's underlying securities plus periodic realized capital appreciation. Bond funds typically pay higher dividends than
890:
248:
Bond funds typically charge a fee, often as a percentage of the total investment amount. This fee is not applicable to individually held bonds.
171:
Bond funds may also be classified by factors such as type of yield (high income) or term (short, medium, long) or some other specialty such as
35:
137:: Government bonds are considered safest, since a government can always "print more money" to pay its debt. In the United States, these are
878:
884:
357:
491:
289:
418:
814:
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229:: In a fund, income from all bonds can be reinvested automatically and consistently added to the value of the fund.
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138:
373:
804:
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91:
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917:
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912:
819:
51:
430:
753:
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115:
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922:
477:
119:
8:
569:
645:
99:
852:
778:
630:
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235:: You can sell shares in a bond fund at any time without regard to bond maturities.
842:
713:
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837:
748:
733:
723:
675:
615:
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338:
773:
718:
665:
595:
521:
274:
122:. Most bond funds pay out dividends more frequently than individual bonds.
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829:
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500:
319:
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309:
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164:
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107:
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783:
738:
111:
130:
Bond Funds can be classified by their primary underlying assets:
175:, international bonds, multisector bonds or convertible bonds.
469:
141:
or
Treasurys. Due to the safety, the yields are typically low.
406:"Bond-fund buyers rewarded for risk in 2009 - MarketWatch"
431:"10-Year Bond vs. 20-Year Bond | Finance - Zacks"
290:
Financial risk management § Investment management
239:
891:
Securities
Industry and Financial Markets Association
339:
U.S. Securities and
Exchange Commission on Bond Funds
374:"Junk Bond ETFs Crimped by Outflows - Yahoo Finance"
208:
16:
Fund that invests in bonds or other debt securities
904:
485:
32:The examples and perspective in this article
879:Commercial Mortgage Securities Association
492:
478:
392:"Sour Market Sends Investors to Bond ETFs"
70:Learn how and when to remove this message
885:International Capital Market Association
419:Best ETFs For Traders: Short-Term Bonds
905:
473:
350:
348:
346:
110:. Bond funds typically pay periodic
102:. Bond funds can be contrasted with
18:
815:Commercial mortgage-backed security
240:Disadvantages over individual bonds
13:
810:Collateralized mortgage obligation
343:
205:and will terminate at that point.
188:desire for "safe" cash and bonds.
14:
934:
139:United States Treasury securities
209:Advantages over individual bonds
191:
178:
23:
499:
268:
805:Collateralized debt obligation
681:Reverse convertible securities
441:
423:
412:
398:
384:
366:
355:CNN Money 101 - Types of Bonds
332:
1:
325:
227:Automatic income reinvestment
449:"Calvert - Bond Fund Basics"
7:
621:Contingent convertible bond
283:
46:, discuss the issue on the
10:
939:
661:Inverse floating rate note
360:November 23, 2006, at the
272:
871:
828:
792:
694:
588:
530:
507:
435:Zacks Investment Research
820:Mortgage-backed security
589:Types of bonds by payout
531:Types of bonds by issuer
125:
754:Option-adjusted spread
656:Inflation-indexed bond
800:Asset-backed security
764:Weighted-average life
601:Auction rate security
262:Net Asset Value (NAV)
120:money market accounts
793:Securitized products
52:create a new article
44:improve this article
34:may not represent a
570:Infrastructure bond
252:Variable Dividends:
646:Floating rate note
900:
899:
853:Exchangeable bond
779:Yield to maturity
631:Exchangeable bond
553:Subordinated debt
305:Stable value fund
173:zero-coupon bonds
80:
79:
72:
54:, as appropriate.
930:
918:Investment funds
843:Convertible bond
686:Zero-coupon bond
626:Convertible bond
611:Commercial paper
494:
487:
480:
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451:. Archived from
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315:Target date fund
98:, or other debt
94:that invests in
75:
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55:
27:
26:
19:
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913:Bonds (finance)
903:
902:
901:
896:
867:
858:Extendible bond
848:Embedded option
824:
788:
690:
651:High-yield debt
641:Fixed rate bond
636:Extendible bond
584:
565:Government bond
560:Distressed debt
526:
503:
498:
468:
467:
458:
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362:Wayback Machine
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221:Diversification
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28:
24:
17:
12:
11:
5:
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845:
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832:
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823:
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807:
802:
796:
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790:
789:
787:
786:
781:
776:
771:
766:
761:
759:Risk-free bond
756:
751:
746:
744:Mortgage yield
741:
736:
731:
726:
721:
716:
711:
706:
700:
698:
696:Bond valuation
692:
691:
689:
688:
683:
678:
673:
671:Perpetual bond
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663:
658:
653:
648:
643:
638:
633:
628:
623:
618:
613:
608:
603:
598:
592:
590:
586:
585:
583:
582:
577:
575:Municipal bond
572:
567:
562:
557:
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543:Corporate bond
540:
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532:
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525:
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497:
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408:. MarketWatch.
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378:Yahoo! Finance
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273:Main article:
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78:
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60:September 2010
38:of the subject
36:worldwide view
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22:
15:
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3:
2:
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914:
911:
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864:
863:Puttable bond
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859:
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849:
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844:
841:
839:
838:Callable bond
836:
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833:
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749:Nominal yield
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745:
742:
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732:
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727:
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724:Current yield
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720:
719:Credit spread
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712:
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676:Puttable bond
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664:
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639:
637:
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629:
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622:
619:
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614:
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609:
607:
606:Callable bond
604:
602:
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594:
593:
591:
587:
581:
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573:
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568:
566:
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541:
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455:on 2007-02-03
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258:Variable NAV:
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192:Bond duration
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179:Credit rating
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63:
53:
49:
45:
39:
37:
30:
21:
20:
872:Institutions
830:Bond options
774:Yield spread
666:Lottery bond
596:Accrual bond
522:Fixed income
457:. Retrieved
453:the original
443:
425:
414:
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368:
334:
278:
275:Total return
269:Total return
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87:
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66:
57:
33:
923:Bond market
769:Yield curve
729:Dirty price
704:Clean price
580:Global bond
548:Senior debt
538:Agency bond
501:Bond market
320:Yield curve
295:Income fund
108:money funds
104:stock funds
907:Categories
459:2007-02-13
326:References
310:Stock fund
300:Money fund
215:Management
165:junk bonds
149:Fannie Mae
135:Government
100:securities
709:Convexity
517:Debenture
233:Liquidity
161:Corporate
155:Municipal
112:dividends
88:debt fund
84:bond fund
48:talk page
784:Z-spread
739:I-spread
734:Duration
358:Archived
284:See also
42:You may
893:(SIFMA)
887:(ICMA)
881:(CMSA)
714:Coupon
616:Consol
145:Agency
246:Fees:
126:Types
96:bonds
90:is a
50:, or
512:Bond
260:The
203:date
118:and
106:and
92:fund
116:CDs
86:or
909::
433:.
376:.
345:^
151:).
82:A
493:e
486:t
479:v
462:.
437:.
394:.
380:.
73:)
67:(
62:)
58:(
40:.
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