Some bond funds pay a regular income to the investor, and those funds will have the tag ‘Dis’ or ‘Inc’ in the name, shorthand for Distributing or Income funds. Funds that don’t pay income are usually tagged ‘Acc’, shorthand for Accumulation. All the performances for funds in this article are based on total return, meaning that if income is paid then it is considered to be reinvested.
To summarise, perhaps the most important decision made with any portfolio is the percentage allocation to the bond asset class, and that will depend fundamentally on the investor’s risk profile and time horizon.
Within the bond segment, diversification is still key and global market factors will additionally have an impact on what bond classes are selected. Disciplined rebalancing helps counter emotional mistakes that investors make, and automates the process of buying when specific asset class prices are relatively low and selling when they are relatively high.
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