A bond fund is like a perpetually rolling bond ladder that never matures.What I don't understand are bond funds. I have heard people say that a bond fund is like a bond ladder of the same maturity but I don't see how.
Some they will, some they won't, some will get close to maturity, and some won't at all.Let's say I get an intermediate term bond fund with an average duration of 10 years. I presume as the bonds age that the bond fund doesn't hold these bonds to maturity (or do they?).
Yes.Seems to me then that they are pretty tied to interest rates since at the time they are buying or selling the cost they pay will depend on the interest rates that exist at that time.
Yes, because the bond fund maintains the same/similar average duration. A bond fund with an average duration of ~10 years will still have an average duration of ~10 years 9 years later. As your horizon for needing the money approaches, you need to shorten the overall duration of your invested money that you will need then to match your timeline.Would I have to be the one to sell my intermediate term bond fund to buy a short term bond fund as time moves forward towards that 10 year period?
Statistics: Posted by Beensabu — Thu Aug 29, 2024 11:27 pm — Replies 6 — Views 503