What is a Bond Fund?
A bond fund is a group of bonds that is professionally managed. In order to pursue the goals of the fund, a fund tends to be made up of individual bonds similar in maturity, quality, and type of issuer. Most bond funds pay regular income and their share prices may tend to fluctuate less than a stock fund. The amount of each dividend payment may vary with market conditions however. During periods of extreme market fluctuations, a bond fund may not provide the amount of income originally anticipated. Westcore Funds offers three bond funds, Westcore Flexible Income Fund, Westcore Plus Bond Fund, and Westcore Colorado Tax-Exempt Fund. What is the difference between equity and bond funds? Equity funds primarily invest in stocks, while bond funds (also referred to as income or fixed-income funds) invest mainly in bond and debt instruments. Equity funds have historically provided financial growth and appreciation, while bond funds often provide regular income dividends. Over time, equity fund
A bond fund is a mutual fund made up of monies invested in an assortment of bonds or other debt securities. Bonds are interest-bearing document or certificate that identifies a debt to a public or private corporation. When you purchase a bond you are loaning money to the bond’s issuer, usually a company, for a specified length of time. The due date for payback is the bond’s “maturity date.” Bonds are generally considered to be more conservative (i.e. safer) than stocks, but the best portfolios contain a combination of conservative and aggressive investments appropriate to your goals. Many companies and public organizations use bonds, from your municipality to large corporations to governments. For example, when you buy a US Treasury bond, you are lending money to the US government for the use of operating costs or to pay off debt. This type of bond is fairly safe, but it has a relatively low interest rate. You can also purchase corporate bonds, through which you lend money to a corpora
A bond fund is a mutual fund which invests in bonds, typically with the objective of providing stable income. These funds may invest in a specific type of bond, such as corporate, government, high-yield, municipal or zero-coupon, or they may invest in all or some bond types. Bond funds, unlike bonds, do not have a maturity date. When you purchase a bond and hold it until maturity, you lock in your return at the time of purchase (unless the bond issuer defaults on its obligations). With a bond fund, the value of your investment is likely to fluctuate, and there is a risk of losing value in a rising interest rate environment when yields rise, but the price of bonds fall. The greater the duration of the bond fund, the greater this interest rate risk.
