Which debt funds have good returns

Funds - basic knowledge

What is a pension fund?

Pension funds are special funds that invest the majority of their capital in fixed-income securities from domestic and foreign issuers. These are essentially:

  • Bunds and federal bonds (issued by the German state),
  • Government bonds (issued by foreign countries),
  • State bonds (issued by the federal states),
  • Municipal bonds (issued by the municipalities),
  • Pfandbriefe (issued by mortgage banks),
  • Bearer bonds (issued by banks and savings banks),
  • Corporate bonds (issued by companies).

In addition, bonds with variable interest rates as well as zero coupon bonds (zero bonds) and money market investments belong to the range of investments of conventional bond funds.

A distinction is made between euro bond funds that invest primarily in debt instruments denominated in euros. Assuming the debtors have a good credit rating, they are a very conservative form of pension fund. Their performance is determined almost exclusively by accruing interest income and changes in the price of the pensions contained in the fund assets. In the case of foreign currency bond funds, on the other hand, currency risk is added as a decisive opportunity / risk factor.

"Risk pension funds" should be named as the third category at this point, even if this designation is not usually found in fund databases. Your managers invest the fund's assets in bonds from second- or third-rate borrowers or even in so-called "junk bonds" (junk bonds). The issuers of these papers are at increased risk that they will not meet their payment obligations in the long term and that the bond will eventually default or have to be restructured on significantly worse terms (e.g. Argentine government bonds). If, on the other hand, everything goes well, the return on risky bonds is also significantly higher than that of conventional fixed-income securities. High risks are therefore also offset by high opportunities.

Apart from the species just described, the opportunities and risks of bond funds are generally significantly lower than those of equity funds. Euro bond funds in particular are therefore suitable for conservative investors. However, bond funds can also show significant fluctuations in value. Rising interest rates on the capital market inevitably lead to losses in the value of the interest-bearing securities contained in the fund's assets. The longer the average remaining term of the bonds, the higher the losses, although this relationship - only with the opposite effect - of course also applies to falling interest rates. In addition, many pension funds are allowed to invest part of their money in stocks. In particular, investors who want to invest exclusively in fixed-income securities because the risk associated with equity investments seems too high to them should therefore prefer bond funds that, due to their investment guidelines, are only allowed to invest a very small part of their assets outside the fixed-income range.

In our fund search you will find many pension funds that can be filtered according to various criteria.
To the fund search for pension funds

Or go to our detailed list of the fund type bond funds in the individual fund categories.
Types of funds Bond funds