What you need to know about Investing in Bond Funds

Saturday 27 March 2004

Around 5 per cent of NZ-based retail managed funds is tied up in fixed income funds. Income assets form an integral part of any well-diversified investment portfolio.

By The Landlord

New Zealand fund managers make available a variety of managed fixed interest funds to retail investors, ranging from diversified portfolios of income assets to specialist funds investing into specific interest bearing securities like corporate bonds.

The basis for any income fund is to provide investors with any or all of the following: a regular income stream, capital appreciation, diversification and thus stability within their investment portfolio. As with shares, investors are able to either buy fixed interest securities directly or via a managed fund of similar assets.

Most often though direct access is limited to such securities (e.g government bonds or international bonds) for the retail investor, plus requires a substantial amount of investment capital. Managed funds of income assets provide both access and diversification. The other obvious benefit of investing through a managed fund is the research and investment management skills that the fund manager provides.

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