What are bond funds?
A bond is a debt security, similar to an IOU. A company or government agency may sell (or issue) bonds to raise money for a particular project and promise to pay the buyer the face value of the bond when it becomes due (its maturity date), while paying interest in the meantime. A bond can be bought and sold before it matures, which means the face value of the bond can change during its lifetime. A bond mutual fund is composed of many bonds, with a professional fund manager who buys and sells securities in keeping with the fund’s specific investment objective. T. Rowe Price offers a range of 100% “no-load” bond funds, meaning the investor does not pay sales charges or commissions.
