high-yield (junk) bond funds invest in high-yield, high-risk corporate bonds insured municipal bond funds include municipal bonds that provide tax-exempt income; protected against risk of default intermediate corporate bond funds invest in investment-grade corporate bonds that have maturities between 5-10 years
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As the name implies, international bond funds are taxable bonds issued by foreign governments and corporations. They provide the same benefits as other international investments – namely, diversifying away from a single market.
Debt instruments that fall under the investment grade bucket can include government bond funds like U.S. Treasuries, inflation-protected funds like Treasury Inflation-Protected Securities, mortgage-backed funds like those issued by Fannie Mae or a major bank, and corporate bond funds. Investment-grade bond funds have primary exposure to these types of assets. Vanguard Intermediate-Term Investment-Grade Fund Investor Shares ( VFICX) and Vanguard Short Term Inflation-Protected Securities Index Fund ( VTIPX) are good examples of investment-grade bond funds.
Examples of multisector funds include the PIMCO Income Fund ( PIMIX) and the Fidelity Advisor Strategic Income Fund ( FSIAX ).
A bond fund invests primarily in government, municipal, corporate or convertible bonds as well as other fixed-income instruments like mortgage-backed securities. The stated goal of most bond funds is to provide a stable monthly income for investors. Bond funds are attractive because they can be tied to retirement accounts ...
Investment Grade. Bond funds are often classified as being “investment grade” or not, depending on how well they’ve been rated by a third-party credit rating agency. Bonds that have been rated investment grade offer the highest credit quality, meaning your capital and interest payments are more likely to be preserved.
Bond funds are attractive because they can be tied to retirement accounts and can be used to hedge against market uncertainty. Since most portfolios have exposure to stocks, government and corporate bonds provide more stable investment vehicles.
For mutual fund investors, bond funds are an effective way to diversify and create a well-balanced portfolio. Like other investment vehicles, bond funds must be approached with your stated investment goals and time horizon in mind.
Norma Rose is buying shares in a mutual fund that only invests in companies from countries other than the United States. What type of mutual is she buying?
Sloan Richards is buying shares in a mutual fund that invests in companies that have a market capitalization of less than $2 billion. What type of mutual fund is this?
Tisha Elmwood is buying shares in a mutual fund that avoids companies that do harm to people, animals, and the environment. What type of mutual fund is this?
During 2008, Lincoln Masters received income dividends of $850 and capital gain distributions of $540. Based on this information:
Last month Nellie Jacobson's divorce became final. As part of the settlement, she received $150,000. She would like to invest in mutual funds, but since she is 62 years old, she is concerned with the safety of her "nest egg." Which of the following mutual funds would you recommend?
Martin Campbell wants to invest in mutual funds, but is also worried about diversification. Which fund would you recommend to him?
Henrietta Marston plans to retire in the year 2050. She is considering a fund that will be more aggressive now and become more conservative as she approaches retirement. Which of the following funds would you recommend to her?