Fixed income funds

With fixed income funds, you can seek returns from the fixed income market.

You can reduce the market risk of your investments by diversifying your assets into fixed income investments.

The value of fixed income funds typically fluctuates less than that of equity funds.

Fixed income funds diversify their assets in terms of time, territory and instruments.

Find the fixed income fund best suited to your needs

Fixed income funds offer suitable alternatives for savers and investors looking for steady value performance at a low risk level. Short-term fixed income funds are suitable for short-term investing and long-term bond funds for long-term investing. The value fluctuation of fixed income funds is more moderate than that of equity investments, for example.

Diversification is an essential part of risk management in investing, and fixed income funds are a good addition to other investment products. Fixed income investments are made in both domestic and international instruments.

Short-term fixed income funds

Short-term fixed income funds invest their assets in short-term money market instruments such as treasury bills, banks’ certificates of deposit, local authority bills and commercial papers. These mature on average within one year.

Long-term bond funds

Long-term bond funds mainly invest in bonds with a maturity of more than one year and in other fixed income instruments. Bonds can be issued by governments, other public entities and companies. Very high-risk corporate bonds are called high yield bonds.

Yield and risk of fixed income funds

The yield on fixed income funds consists of the coupon rate paid on the investment and any increase in the value of investments. The value of fixed income funds is also influenced by changes in interest rates and the economic situation.
Fixed income funds come in various risk categories. The most significant risk is interest rate risk, which is measured with an indicator called duration. Simply put, the greater the duration, the higher the risk.

Example:if the duration of a bond or fund unit is 5, this means the price of the bond will change by approximately 5% if the interest yield changes by one percentage point.

Funds with a higher risk level can offer a higher yield, but their value can also fluctuate more than that of funds with a lower risk level. Further details about the performance and risks of funds are available in the fund's Key Information Document and the funds prospectus. Investing always involves risks. It is possible to lose some or all of the invested assets.

Fixed income funds as part of well-diversified investments

Fixed income funds diversify their assets in terms of time, territory and instruments. From the investor’s perspective, this means that diversification is effective and the yield on their fixed income investment does not hinge on the performance of a single bond.

Investing in fixed income funds is easy

If you invest directly in bonds you need more capital to invest and are tied to the predetermined maturity of the fixed income investment. In turn, fixed income funds allow smaller one-off or monthly investments. As you can subscribe for and redeem fund units every banking day, you can access your assets flexibly, according to the schedule specified in the fund rules. As regards funds, the assets are usually paid in 1–2 weekdays.

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This is a marketing communication. OP Fund Management Company Ltd and OP Asset Management Ltd have prepared this material as background information. The information presented in the material is based on sources that the authors consider reliable. However, the authors cannot guarantee that the provided information or opinions are correct or complete. This material is not intended to provide, and cannot be regarded as, a comprehensive and complete description of the product and the risks involved. Although the material has been prepared with care, and the aim has been to ensure that all the presented information is accurate, the authors and their employees assume no responsibility for the content of the material, and no decisions or agreements should be made based on it.
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