A fixed-income fund is an investment vehicle holding a collection of government bonds, corporate bonds, high-yield bonds, or certificates of deposit, or CDs.
Also called: Bond fund
What is a fixed-income fund?
- A bond fund can protect an equity-heavy portfolio or deliver reliable income.
- A fixed-income fund tends to be a safer investment than owning individual bonds because of its diversification benefits.
Fixed-income funds are an effective way to diversify a portfolio. These core holdings can provide a ballast toward an equity-heavy portfolio, deliver reliable income, or protect against inflation. Fixed-income funds tend to be safer investments than owning individual bonds because of their diversification benefits.
Fixed-income funds, like stock funds, can be actively or passively managed. Passively managed bond funds tend to have lower expense ratios than actively managed funds. However, both types of bond-fund management can earn high Morningstar Analyst Ratings.