Who Buys Bonds?
A broad universe of institutions and individuals purchase bonds. As investments, bonds can provide a means of preserving capital and earning a predictable return. Bond investments create steady streams of income from investment payments prior to maturity. Bonds can also provide downside investment protection against the more volatile movements of the stock markets. Pension funds, insurance companies, banks, and corporations are the biggest customers, buying bonds to have stable sources of cash flows to meet predictable obligations. For example, insurance companies use the regular interest payments to meet obligations from policies they sell. Government and business with big pensions buy bonds in order to ensure that capital is in place to meet obligations for retired employees and beneficiaries. Mutual funds and international investors, such as central banks, are also big investors.
