Intermediate · I10
Understanding Bond Funds
What you own when you own a bond fund. This module shows what a rise in market yields does to it, what its four income figures mean, and where a fund sits on the two main risks.
By the end of this module, you’ll be able to:
- Tell a bond fund from a single bond.
- Explain how higher yields after a loss can improve future bond-fund returns.
- Read the four income figures on a bond fund’s page.
- Read a bond fund’s credit-quality breakdown.
- Place a bond fund by its interest-rate risk and credit risk.
- Compare bond funds, GICs and savings accounts using date, tolerance, guarantee and access needs.
5 parts · about 40 minutes
- 1What you actually own: why a bond fund exists, what changes, and the five lines on its page
- 2The income figures on the page: the four figures, and why two of them can differ
- 3How solid is the borrower: the rating ladder, and the map of the two risks
- 4When the dials move: yields, income, selling, and why riskier borrowers pay more
- 5What the fund is for: the kinds of bond fund, GICs and savings accounts, then Understanding Bond Funds in one page + a quick check
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