What are the Risks of Fixed Income Mutual Funds?

[Suba]

Fixed income mutual funds are a type of mutual fund that allocates and manages at least 80% of the funds that have been collected into bonds with a maturity of more than one year. Fixed income mutual funds promise higher returns than money market mutual funds. However, as novice investors, we also need to know the risks involved in fixed income mutual funds. In your opinion, what are the risks?

 

[Augusta]

Fixed income mutual funds are not risk-free, it types of risk, include interest rates risk. When interest rates rise, the price of fixed income securities falls, credit risk and even Liquidity ris. The risk that investors will not be able to buy or sell investments quickly at a price close to the asset's true value

 

[kit_hung]

Fixed income mutual funds seem safe but there are still major risks. One is interest rate risk. If you see interest rates rising, the value of the bond will fall and you may lose your profits. Another is credit risk. Bonds held by weak companies or governments may fail to pay and leave investors empty-handed.

It's like the story of Sisyphus, who was pushing a stone up a mountain every time it rolled back down. An investor may find himself working without seeing any results because of market risk and liquidity risk. Sometimes you can't sell your bonds quickly and your money will get stuck. So you must know these risks before jumping in.