Fixed Maturity Bond Funds

Bonds are back! After years of low-rate environment, bonds finally offer attractive yields again. Many investors find their ways back to bonds. Next to the attractiveness of the yield, reintegrating bonds to your portfolio also benefits the overall diversification.

Bonds are generally less volatile than stocks, but investors must not lose sight of some risks linked to bonds. Risks such as interest rate risk, liquidity risk and certainly credit risk. Mutual funds offer an efficient way to diversify those risks. When investing in bond funds you will diversify those risks over a large range of different bonds, selected and managed by a professional asset manager.

But open-end funds might not offer the same convenience coming from an investment in a single bond, like having a fixed maturity and a yearly interest payment. This can be solved with fixed maturity bond funds. When investing in fixed maturity bond fund you will, just as with a traditional bond, benefit from a fixed maturity date of your fund (for income funds). Here are some key aspects of Fixed Maturity Bond Funds

• Fixed Maturity Date: The fund will be automatically liquidated, and proceeds paid back on your current account.

• Regular Income: if you invest in income funds, you will also receive regular interest payments if you opt for an income shareclass.

• Flexible: you can redeem fixed maturities funds as you can redeem regular bond funds, however, once subscription period ended, you will not be able to make additional subscriptions .

• Diversified & Professionally Managed: Selecting the right bonds is not easy. How can I optimise returns and manage risk? Bonds within fixed maturity bonds funds are selected by investment professionals who make this assessment for you.

• Degressive rate sensitivity: open end bonds funds are sensitive to rate movements at any time. When investing in fixed maturity bond funds, the fund will be less and less volatile when nearing maturity dates when market interest rates fluctuate.

• Fees: Instead of paying transaction fees for individual funds, you will pay annual management fees and potential dilution fees. Dilution fees are applied when you redeem maturity.


Discover our selection of Fixed Maturity bond funds underneath and benefit of the best of both worlds. The convenience of a single bond fund, the diversification and professional management of a Mutual Fund.


General disclaimer

This article and this page are of an informative nature and are subject to change. They are provided for information purposes only and have no contractual value. The content is not intended to provide investment advice or any other investment service, and does not constitute, on the part of MeDirect Banque SA, an offer, a personalised recommendation or advice, with a view to investment in the asset classes mentioned and may not be considered as such. Investing always involves risks. The information contained on this page does not constitute legal, tax or accounting advice.