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Since the release of the new asset management regulations, principal-guaranteed financial products have gradually withdrawn from the market. Among various major asset classes such as bonds, stocks, commodities and derivatives, bonds are regarded by many investors who pursue stability as the next ideal investment product because of their lower volatility and relatively stable cash flow.

However, for some friends who are used to capital preservation, they are often uneasy and don’t know how to deal with the decline of the fund because they don’t know enough about bond investment. Today, we have selected 4 most frequently asked questions about bond fund investment and answered them uniformly, hoping that everyone can have a basic understanding of the definition and volatility characteristics of this type of asset.

Question 1: Why do bond funds also fall?

The income of bond funds comes from two aspects: one is coupon income, which is a relatively stable source of income for bond funds; the other is bond price difference. Bonds are tradable financial assets and their prices will rise and fall like stocks. For example, the 30-year Treasury bond that was issued not long ago was priced at 100 yuan per bond when it was issued, but it rose to a maximum of about 125 yuan per bond on the first day of listing.

Compared with the stability of coupons, the fluctuation of bond prices is often the main reason for the fluctuation of fund net value. For example, if the fund manager buys a bond at 125 yuan per bond, and then the bond price falls back to 100 yuan per bond, the price difference income of this investment will be negative. If the fund's coupon income cannot make up for the loss caused by the price difference, the fund's total income will turn negative, that is, the net value will fall.