What are Bonds and Bond Mutual Funds?
A Bond is evidence of a loan made to an organization (government, municipality or corporation) from another party. The organization promises to pay the bond holder a specified amount of interest for a certain time and to repay the loan amount (principal) on the bond maturity date. A Bond Mutual Fund is an investment company, which pools money from investors and uses the money to purchase and manage a diversified portfolio of bonds. Investors buy shares in this managed portfolio. Shares of mutual funds are not traded on the open market, but are purchased from, and redeemed by the mutual fund company itself. The price of shares fluctuates daily with the price of the bonds in the portfolio. The price per share is also referred to as the net asset value (NAV) and is determined once a day at the close of the bond market. How does the Managed Income Portfolio operate? When BCA’s technical indicators determine that an upward trend in bond prices is established, BCA allocates investors’ capita
