One of the most popular ways of investing in the Bond market is through a unit linked bond fund. When you invest in a unit linked bond fund your money is pooled with other investors to gain the benefit of being a large single investor. The money is then invested by a fund manager unto a select portfolio of bonds managed to seek returns in the form of capital gains and /or income.
The total value of the assets in the fund is divided amongst the investors by way of allocating units to each investor depending on their contribution to the fund and the growth earned on that contribution. A unit is a measure used to identify the investor’s individual share in a unit linked fund.
Government and corporate bonds are bought and sold on the open market. This simply means that bonds are bought and sold on the bond market in a similar way to how shares are bought and sold on a stock market. Here their prices are constantly fluctuating in line with changes in interest rates and the outlook for inflation.
Additionally, companies and governments may issue a number of bonds at the same time but these may pay different interest rates and have different maturity dates.
Given the number of bonds in the market, their varying characteristics and the general economic environment, it is often difficult for private investors to work out what bonds offer the best investment conditions. This is where an investor can benefit from a professional managed fund. There are many bond types available and we will help you choose the most appropriate fund to suit your individual needs and risk profile.