Definition: What are Bond Mutual Funds?
Bond mutual funds are a special type of mutual funds.
A mutual fund is defined as a collection of financial products that are gathered together into a single fund for consumers to invest in.
Mutual funds in general contain a wide variety of products, but bond mutual funds are made up for the most part by investments in various types of bonds.
Essentially, a bond is an agreement of a debt.
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An organization such as a government, bank or a company is asking to borrow money from an investor. In return, they’ll pay back the money with additional interest.
Additional Information on Bond Mutual Funds
Bond mutual funds are normally administered and managed by a fund manager.
There are many different types of bonds that managers of bond mutual funds choose to include in a bond portfolio.
Bond funds offer the advantage of easy diversification, because a person can essentially own many different bonds without having to purchase them individually.
As most bonds are typically priced high, bond mutual funds allow diversification at a lower buy in price
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