Bond Funds: Investment Grade
These funds invest primarily in investment grade bonds issued by governments and corporations, or in bonds backed by assets like home mortgages.
Reasons to consider investment grade bond funds
- Investment grade bonds are considered to be of higher credit quality than high yield bonds.
- Funds invest in bonds with a historically lower risk of default.
- Funds are generally less volatile than high yield bond funds, although the yields tend to be lower.
Find investment grade bond funds
Types of investment grade bond funds
Government bond funds invest in bonds issued by the U.S. government and government-sponsored enterprises, as well as mortgage and other asset-backed securities.
These funds primarily invest in Treasury Inflation-Protected Securities (TIPS), whose face value adjusts to keep pace with the Consumer Price Index (CPI), typically making them a good hedge against inflation.
These funds invest in securities backed by pools of mortgages issued by government agencies, banks, or other financial institutions.
These funds invest in bonds issued by corporations. The yields and risks are generally higher than those offered by government and most municipal bonds, and the income is subject to state and federal taxes.
These funds invest in a diversified mix of bonds issued by the U.S. government, government agencies, and corporations, as well as mortgage-backed bonds, which may help mitigate risk.