Bond funds hold many bonds, so there is no single maturity date that returns your personal capital. Their unit prices fluctuate like any other fund.

Buying a bond means lending money to a government, company or other issuer under agreed terms. In return, the issuer promises interest payments and repayment according to the bond’s conditions.

The word “bond” can sound stable, but a bond’s market value can move before it matures. When market interest rates rise, existing fixed-rate bonds often become less attractive and their prices may fall. Longer-dated bonds are usually more sensitive to rate changes. There is also credit risk: the issuer may struggle to pay as promised.

Funds can provide income and diversification. The result depends on duration, credit quality, interest rates, fees and the fund’s mandate.

Try this now

For one bond or bond fund, identify the issuer or main holdings, maturity profile or duration, credit-quality description, income treatment and recommended holding period.

Ask your advisor

  • Is the main risk here interest-rate movement, credit quality or both?
  • Is this a single bond held to maturity or a fund whose holdings keep changing?
  • What role should it play beside cash and growth assets?

“Income investment” describes a purpose or return source; it does not mean the value cannot fall.

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