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Understanding Bond Funds

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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

  1. 1What you actually own: why a bond fund exists, what changes, and the five lines on its page
  2. 2The income figures on the page: the four figures, and why two of them can differ
  3. 3How solid is the borrower: the rating ladder, and the map of the two risks
  4. 4When the dials move: yields, income, selling, and why riskier borrowers pay more
  5. 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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