Just call us Bond. Amortized bond.
Over 700 finance terms, Shmooped to perfection.
A mutual fund that invests in—yep, you guessed it—bonds. Bond funds can be diversified (meaning that they invest in many different types of bonds), or they can be more specific, investing in, say, only in municipal bonds or other specific types of bonds.
Bond funds are considered more stable than funds that invest heavily in stocks, since bonds are less volatile. However, bonds also have a smaller potential for growth. Check out our section on investing for more on all that.