Tips for Investing in Bond Funds

When investing in a bond fund, you would invest much like any type of mutual fund. You want to make sure that you do your research to ensure that you are getting the best possible fund, so that you can make the most off of your invested money.

Here are some tips to help you find the best possible bond funds :

1. Look over the past performance of the bond fund. Check to see what the annual return is, this will be represented as a percentage. Now look at the average annual return. By looking at the average, you will see how the bond has traditionally performed overtime. I would make sure that you check back at least 2 years to ensure that the bond has performed satisfactorily over the last few years. I NEVER invest in a bond fund that has taken a loss within the last two years. That to me is a huge sign of fund mismanagement as bond funds are extremely stable funds to invest in. To see a loss just shows that the management team wasn’t doing their job.

2. Make sure you check the background of your management team. If they have a shady past, don’t invest. This is extremely important, because the better team you have, the better chance you’ll have of making a great return on the fund.

After you have looked at the management team and the history of the bond fund, you should be relatively set to invest. These are the main factors that I use in determining which bond fund to invest in. I usually spend much more time on mutual funds than I do researching bond funds, because most I find operate under similar principles. A bond fund is more of a safe investment for me in comparison to my traditional investments, so I make sure I have a good management team and trust them from there.