Types of Bond Funds

Almost every kind of bond can be found in one bond mutual fund or another. Bonds of each type are usually packaged together. For example, a fund may include only corporate bonds or international bonds. One reason bonds of the same type are packaged together is that they have similar objectives and features.

• Corporate bond funds are made of bonds issued by companies in the private sector.
• Zero coupon bond funds are pools of zero coupon bonds, which do not pay interest currently. Instead, they realize income only when they mature.
• International bond funds invest in debt securities of governments and corporations of other nations.
• Convertible securities funds invest in debt securities that can be converted into stock.

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