What does a fixed-income fund typically invest in?
A. Fixed-income funds generally invest in debt securities, also known as bonds. The types of bonds in which a fixed-income fund invests depends on the fund’s investment approach. Some fixed-income funds invest based on credit quality, while others invest based on the type of issuer, whether it is GNMA, the U.S. government or a corporate issuer. Some funds will also invest based on the maturity of the security, specifically short, intermediate or long term. You would need to consult the fund’s prospectus for the specific types of securities that the fund may invest in, along with the potential risks that are associated with those types of securities.
