Business and Personal Finance Dictionary

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• BOND FUND
  
  Bond mutual funds invest in bonds to produce income. Unlike individual bonds, bond funds have no fixed maturity date and no guaranteed interest rate. Nor do they promise to return your principal. Their appeal is that you can usually invest a much smaller amount of money than you would need to buy a portfolio of bonds on your own, making it easier to diversify your fixed-income investments. There is a great variety of bond funds, each with a specific investment strategy. For example, some funds invest in long-term, and others in short-term, bonds. Some buy government bonds, while others buy corporate bonds or municipal bonds. Finally, some buy investment-grade bonds, while others focus on high-yield bonds. In other words, you could buy a long-term, investment-grade municipal bond fund, a short-term, high-yield corporate bond fund-or almost any other combination.
  
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