Types of Bond FundsAlmost every kind of bond can be found in one bond mutual fund or another. Bonds of each type are usually packaged together. For example, a fund may include only corporate bonds or international bonds. One reason bonds of the same type are packaged together is that they have similar objectives and features.
- Corporate bond funds are made of bonds issued by companies in the private sector.
- Zero coupon bond funds are pools of zero coupon bonds, which do not pay interest currently. Instead, they realize income only when they mature.
- International bond funds invest in debt securities of governments and corporations of other nations.
- Convertible securities funds invest in debt securities that can be converted into stock.