THE SHOPPING MALL OF INVESTMENTS
sury bonds, they aren’t callable. This means that the bond fund will receive the full amount of interest plus principal, which it will then pass on to the shareholders. These funds help provide security and
stability for the investor’s portfolio.
U.S. GOVERNMENT INCOME FUNDS.
These funds attempt to
achieve a higher yield by investing in different types of government securities, including Treasury bonds and notes and other federally
GINNIE MAE FUNDS.
These funds invest primarily in govern-
ment-backed, mortgage-backed securities. Ginnie Mae is the com- mon name for the Government National Mortgage Association.
invest in high-quality bonds issued by diverse companies who are raising capital. The associated risk with these funds is based upon the
bonds’ issuing companies’ creditworthiness. These bonds mally callable and may have any length of maturities.
HIGH-YIELD BOND FUNDS. High-yield, or junk, bonds try to earn a higher rate of return by investing in bonds with a low credit rating. The lower the credit rating, the riskier the bond is. However, these bonds are known to pay a much higher interest rate than those corpo- rate bonds with high ratings. These bonds often go into default, where the issuer can no longer pay the interest. By investing in higher-risk bonds, high-yield bonds hope to achieve higher returns for their shareholders. The higher the risk, the greater the potential payout.
INCOME-BOND FUNDS. These bonds try to provide current income for their shareholders by investing in a combination of cor- porate and government bonds.
INTERNATIONAL BOND FUNDS.
International bond funds invest in
the bonds of foreign governments, corporations, or both. They do not hold any bonds from the United States. These funds are subject to price fluctuations based upon the prices of the underlying bonds, which are expressed in that country’s currency. For instance, if within an international bond fund, there is a bond from Great Britain, the