Question reg Bond Funds

General
1

Hi,

I had two question;

  1. For eg. A corporate bond, if a bond pays interest at regular intervals, how is there a daily NAV change.

  2. I was looking at various bond fund types, and there are a lot. Till now I have short-listed on performance, Floaters, Money Market, Corp. Bond, Dynamic, Liquid. I would be interested to know when, why and types of Bond Funds you have taken up and what has been your experience.

Thanks!

2

  1. The anticipated interest is evenly spread out over the days and hence that much NAV is accounted for over the days.

  2. Bond funds are best played depending on where we are in Interest Rates cycle. In low interest rates cycle, it is best to stick to shortest duration bond funds - Overnight, Liquid and Money Market funds.
    In high interest rates cycle, best to shift to High Duration bond funds - 10 year Gilt Funds, 20-30 year Long Duration funds etc.

1 Like