book

The Fund Industry: How Your Money is Managed, 2nd Edition

by Theresa Hamacher, Robert Pozen

February 2015

Beginner

544 pages

15h 30m

English

Wiley

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ADVANTAGES AND DISADVANTAGES OF MUTUAL FUNDSHISTORY AND GROWTHREGULATORS AND INDUSTRY ASSOCIATIONSCHAPTER SUMMARYNOTES
BUYING AND SELLING FUND SHARESTHE PASS-THROUGH TAX STATUS OF MUTUAL FUNDSA VIRTUAL CORPORATIONETHICAL STANDARDSALTERNATIVES TO MUTUAL FUNDSCHAPTER SUMMARYNOTES

MUTUAL FUNDS AND DISCLOSURETHE SUMMARY PROSPECTUSBEYOND THE SUMMARY PROSPECTUSUSING THE USER GUIDESCHAPTER SUMMARYNOTES
DELINEATING YOUR OWN INVESTMENT OBJECTIVESEVALUATING PERFORMANCETHE TAXONOMY OF MUTUAL FUNDSCHAPTER SUMMARYNOTES
THE FOCUS ON FUND EXPENSESDISTRIBUTION EXPENSESOPERATING EXPENSESTHE MANAGEMENT FEETHE ACTIVE VERSUS PASSIVE DEBATECHAPTER SUMMARYNOTES
STOCK RESEARCHPUTTING IT ALL TOGETHER: MANAGING A STOCK FUNDCHAPTER SUMMARYNOTES
BOND FUND HOLDINGSPUTTING IT ALL TOGETHER: MANAGING A BOND FUNDCHAPTER SUMMARYNOTES
USES OF DERIVATIVES IN FUNDSREGULATION OF DERIVATIVES IN FUNDSNOTES
MONEY MARKET FUNDS AND THE FINANCIAL SYSTEMRULE 2A-7MONEY MARKET FUND HOLDINGSPUTTING IT ALL TOGETHER: MANAGING A MONEY MARKET FUNDCHAPTER SUMMARYNOTES
THE IMPORTANCE OF TRADINGTHE U.S. STOCK MARKETSTHE ROLE OF THE MUTUAL FUND TRADERTRADING IN BOND FUNDSCHAPTER SUMMARYNOTES
MUTUAL FUNDS AND THE PROXY VOTING PROCESSPROXY VOTING BY MUTUAL FUNDSACTIVISM AND MUTUAL FUNDSCURRENT ISSUES IN PROXY VOTINGPROXY VOTING OUTSIDE THE UNITED STATESCHAPTER SUMMARYNOTES
WHAT SELLS MUTUAL FUNDS?DISTRIBUTION CHANNELSFUND PLATFORMSDISTRIBUTION STRATEGYCHAPTER SUMMARYNOTES
THE BENEFITS OF TAX-DEFERRED SAVINGHISTORY AND GROWTH OF 401(K) PLANSCONTRIBUTIONS TO 401(K) PLANSINVESTMENT OPTIONS IN 401(K) PLANSTARGET DATE FUNDSPLAN ADMINISTRATIONCHAPTER SUMMARYNOTES
INDIVIDUAL RETIREMENT ACCOUNTSVARIABLE ANNUITIESTHE FUTURE OF RETIREMENT INCOME IN THE UNITED STATESCHAPTER SUMMARYNOTES
THE TRANSFER AGENTFUND ACCOUNTINGINVESTMENT OPERATIONSCHAPTER SUMMARYNOTES
A BRIEF HISTORYADVANTAGES AND DISADVANTAGESLEGAL STRUCTUREOPERATIONSPORTFOLIO HOLDINGSTHE FUTURE OF ETFsCHAPTER SUMMARYNOTES
TRADITIONAL HEDGE FUNDSTRADITIONAL HEDGE FUND INVESTORSTHE NEW HEDGE FUNDS: LIQUID ALTERNATIVESCHAPTER SUMMARYNOTES
THE GROWTH IN CROSS-BORDER INVESTINGADVANTAGES AND RISKS OF INVESTING OVERSEASOPERATIONAL CHALLENGES OF INVESTING OVERSEASPUTTING IT ALL TOGETHER: MANAGING A GLOBAL OR INTERNATIONAL FUNDCHAPTER SUMMARYNOTES
THE GLOBAL MARKET FOR INVESTMENT FUNDSMODELS FOR A GLOBAL FUND BUSINESSTHE UCITS MODELCHAPTER SUMMARYNOTES
CHILE'S RETIREMENT SYSTEMSINGAPORE'S RETIREMENT SYSTEMNOTES
ROBERT POZENTHERESA HAMACHER, CFA

Content preview from The Fund Industry: How Your Money is Managed, 2nd Edition

CHAPTER 7 Portfolio Management of Bond Funds

In this chapter, we review the portfolio management of bond funds. These funds are also called fixed income funds, a name that refers to the relative predictability of the income stream of the bonds held in the funds. Because the issuers of bonds are contractually obligated to make specified payments to investors on fixed dates, bond returns are generally more stable than stock returns.

This chapter reviews:

The principal types of securities held in bond fund portfolios.
The main approaches to the portfolio management of bond funds.

Before you read on, please note that we assume throughout this discussion that you are familiar with how bonds work and are comfortable with fixed income terminology. If that's not the case, you might want to read the “Bond Basics” chapter, which is available on this book's website.

BOND FUND HOLDINGS

Bond funds are divided into two major segments: taxable and tax-exempt. Taxable funds invest in a variety of bonds that pay interest subject to federal income tax, while tax-exempt funds invest in bonds issued by states and municipalities that are exempt from federal income taxes and sometimes state income taxes. This section reviews the types of securities that are often found in the portfolios of each category of bond fund.

Holdings in Taxable Bond Funds

As we saw in Chapter 4, taxable bond funds have a wide variety of investment objectives. Some funds have a very broad mandate to invest in many kinds ...