Bond funds

Bonds help to strengthen a portfolio's defensive characteristics, yet without implying that they do not present any risk. In a bond portfolio just as in any other, the unalterable principle of diversification is essential. To aim for a better distribution of risk with limited initial capital, choose a bond fund.

What is a bond fund?

Bond funds invest in bond market instruments that generally have residual maturity of three years or more. They are very varied, enabling efficient diversification based on various criteria, such as geographical location, issuance currency, issuer type (governments, companies, supranational or local bodies and so on), credit quality (ratings), management style, etc.

Advantages

  • Optimal risk distribution via broad diversification, even with limited initial capital.   
  • Steady growth in long-term performance
  • Made to measure: sub-funds exist for each investor profile – conservative, defensive, neutral, dynamic and aggressive.
  • Puts inaccessible markets within reach of the private investor for less cost, such as local debt markets in emerging countries.
  • Good liquidity: most bond funds are traded daily based on the net asset value.
  • Active management by specialists with the sole aim of an optimal risk/return ratio.

Risks

There is a broad range of bond funds with very varied risks. Before making an investment decision, investors are asked to read the official documentation that among other aspects describes the risks inherent in the sub-fund, recommended investment horizon and risk category.

Choose the bond fund that suits you

Bond funds can increase diversification for the defensive part of your portfolio. They therefore contribute to optimising the risk/return ratio. Whether your aim is to favour a partial or complete control of risk, ensure optimal diversification, give your bond portfolio a specific focus or target a potentially large, rapid return, your investor profile of course remains the key criterion in your selection.

 
 

Get full details

A well-considered combination of different bond funds enables optimisation of your bond portfolio's risk/return ratio via extensive diversification across geographic regions, currencies, various kinds of issuer and different types of credit quality. 

To improve your bond portfolio's return prospects while keeping risk under control, you can increase the diversification by including bond funds that focus on certain types of debt security, riskier issuers and/or specific regions of the world.

The volatility of the markets and the turbulent periods they experience are often interesting sources of investment opportunities. Certain funds are specifically designed for your portfolio to benefit from this. 

 

 

Information leaflet on Financial Instruments (pdf) Fee schedule for principal securities transactions (pdf)

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