As a result of this ever changing portfolio, the capital value and interest receivable from fixed interest funds is not actually fixed. The “fixed income” relates to the fact that the fund will hold fixed income assets. Interest payments can be received monthly, quarterly, half yearly or annually depending upon the individual fund. Interest payments can be reinvested in order to enhance overall capital growth.
Although not providing a "fixed income", fixed income funds do generally provide more stable returns than, say, an equity fund which could allow you to plan financially as they give you more of an idea of the income you will be receiving from your investment.
Learn more about fixed income funds below:
- They allow you to plan financially
- They invest in fixed income investments such as bonds
- They can help to diversify risk
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