Use tax shelters. A bond fund manager or team of managers research the fixed income markets for the best bonds based upon the overall objective of the bond mutual fund. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from its use. As a Defined Maturity fund approaches its liquidation date, the fund's securities will mature and the fund may reinvest the proceeds in money market securities with lower yields than the securities previously held by the fund.
A rating upgrade pushes up bond prices and a downgrade pulls down prices. The investment minimums for most bond funds are low enough that you can get significantly more diversification for much less money than if you purchased individual bonds.
This is why bonds are considered to be "fixed income: Duration measures the sensitivity of a bond's price to changes in interest rates. Message Optional.
Independent Programming. Although many have moderate credit risk, there are high-yield options that increase default risk see high-yield bond funds.
Representative Image. For mutual funds, top Fidelity funds and non-Fidelity funds shown.
High credit risk and history of significant price volatility, especially relative to higher-quality bonds. Consult with an attorney or tax professional regarding your specific legal or tax situation.How To Invest in Corporate Bonds
When rates do eventually move higher bond fund values will be at risk. Typically, a bond fund manager buys and sells according to market conditions and rarely holds bonds until maturity.
But contrary to popular perception of being risk-free, they are fraught with risks. That's bad for bonds and bad for bond funds — though not in exactly the same way.
Other funds invest in only the riskiest category of bonds, that is, high-yield or junk bonds.