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Chapter 11. Mutual Funds > Taxable Bond Funds

Taxable Bond Funds

Taxable bond funds are corporate bond funds, and they seek current income by investing in high-quality debt securities issued by U.S. corporations. The following are taxable bond funds:

  • Corporate bond funds—general. These funds invest two-thirds or more of their portfolios in U.S. corporate bonds with no explicit restrictions on average maturity.

  • Corporate bond funds—intermediate term. These funds invest two-thirds or more of their portfolios in U.S. corporate bonds with an average maturity of 5 to 10 years. These funds seek a high level of income with less price volatility than longer-term bond funds.

  • Corporate bond funds—short term. These funds invest two-thirds or more of their portfolios in U.S. corporate bonds with an average maturity of one to five years. These funds seek a high level of income with less price volatility than intermediate-term bond funds.

  • High-yield funds. These funds invest two-thirds or more of their portfolios in lower-rated U.S. corporate bonds (Baa or lower by Moody's and BBB or lower by Standard and Poor's rating services).

  • Global bond funds—general. These funds invest in debt securities worldwide, with no stated average maturity or an average maturity of five years or more. These funds may invest up to 25 percent of assets in companies located in the United States.

    More Information

    Another great source for mutual fund information is Lipper, a division of Reuters. You can find more information at www.lipperweb.com.


  • Global bond funds—short term. These funds invest in debt securities worldwide with an average maturity of one to five years. These funds may invest up to 25 percent of assets in companies located in the United States.

  • World bond funds. These funds invest in foreign government and corporate debt instruments such as international bond and emerging market debt. Two-thirds of an international bond fund's portfolio must be invested outside the United States. Emerging market debt funds invest primarily in debt from underdeveloped regions of the world.

  • Government bond funds. These funds invest in U.S. government bonds of varying maturities and seek high current income.

  • Government bond funds—general. These funds invest two-thirds or more of their portfolios in U.S. government securities of a nonstated average maturity. Securities utilized by investment managers may change with market conditions.

  • Government bond funds—intermediate-term. These funds invest two-thirds or more of their portfolios in U.S. government securities with an average maturity of 5 to 10 years. Securities utilized by investment managers may change with market conditions.

  • Government bond funds—short-term. These funds invest two-thirds or more of their portfolios in U.S. government securities with an average maturity of one to five years. Securities utilized by investment managers may change with market conditions.

  • Mortgage-backed funds. These funds invest two-thirds or more of their portfolios in pooled mortgage-backed securities.

  • Strategic income funds. These funds invest in a combination of U.S. fixed-income securities for the purpose of providing a high level of current income.


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