Fixed income funds focus on financial assets that generate predictable and regular income streams, such as bonds, notes, treasury bills and other debt instruments. Unlike equity funds, which are based on partial ownership of shares in companies, fixed income funds are based on loans of money to governments, corporations or other issuing entities.

A fixed income fund seeks to earn returns through the interest payments generated by the debt assets it holds. The main characteristic of these assets is that they have a predictable stream of payments in the form of interest and, in some cases, repayment of principal at maturity of the bond.

Fixed or Variable Income?

The choice between investing in fixed income or equities depends on the investor’s objectives and risk tolerance. Fixed income tends to be considered less volatile than equities, which can be attractive to those seeking stable income and lower capital risk. On the other hand, equities may offer long-term growth opportunities, but with greater risk of fluctuations in the value of the investment.

1. Predictable income: Investors can expect regular income streams through interest payments.
2. Diversification: Fixed income funds can have diversified portfolios of different types of bonds and obligors, which can help mitigate specific risks.
3. Safety potential: Bonds are generally considered safer assets compared to stocks, which may appeal to conservative investors.
4. Professional management: Fixed income fund managers manage the portfolio and make investment decisions on behalf of investors.
5. Flexibility: Fixed income funds offer the possibility of investing with different maturities and credit risks.

Best Fixed Income Funds 2023

Fund Name	Currency	Manager	Category	TER	2023 Profitability
AB – Mortgage Income Portfolio A2 Acc	EUR	AB – Mortgage Income Portfolio A2 Acc	Fixed Income Flexible	1’30%	7’90%
Vanguard Euro Government Bond Index Fund GBP Hedged Acc	GBP	Vanguard Euro Government Bond Index Fund GBP Hedged Acc	Others	0’12%	6’82%
Vanguard Global Short-Term Corporate Bond Index Fund GBP Hedged Acc	GBP	Vanguard Global Short-Term Corporate Bond Index Fund GBP Hedged Acc	Corporate Fixed Income	0’18%	5’83%
Vanguard Global Corporate Bond Index Fund GBP Hedged Acc	GBP	Vanguard Global Corporate Bond Index Fund GBP Hedged Acc	Corporate Fixed Income	0’18%	5’58%
Vanguard Global Short-Term Bond Index Fund GBP Hedged Dist	GBP	Vanguard Global Short-Term Bond Index Fund GBP Hedged Dist	Fixed Income Government	0’15%	5’30%