Fixed Income Funds
What is a Fixed Income Fund
A fixed income fund typically invests primarily in bonds or other debt securities. Fixed income funds generally seek to pay a distribution on a fixed schedule, though the payment amount is not guaranteed, may vary, and may be zero. Investors may consider this type of fund for its potential for income generation and capital preservation.
Types of Fixed Income Funds
There are a number of different types of income-producing funds, each with its own characteristics and level of risk.
These funds typically invest in bonds issued by sovereign governments and government agencies authorized to issue debt, such as Fannie Mae and Freddie Mac, and international agencies, such as the World Bank and International Monetary Fund.
Municipal bonds are issued by state and local governments in the U.S. in addition to other public authorities, such as school districts. Generally speaking, interest on municipal bonds is exempt from federal income taxes. In some states, interest on bonds issued by that state and the municipalities within it are also exempt from that state’s income taxes.
These funds typically invest in bonds, preferred stocks, and other types of fixed-income instruments representing debt issued by private corporations. Corporate bonds tend to be more risky than bonds issued by governments and carry various credit risks depending on the individual issuer. As a result, however, they may offer potentially higher income opportunities.
These funds typically invest in a variety of fixed-income instruments, including a mix of government and corporate bonds. This provides investors with an additional level of diversification across both credit risk and price.
Asset-backed securities are collateralized by loans that provide an income stream comprised of both principal and interest on the securities. Loans backing these securities include residential and commercial mortgages, automobile loans, credit cards, and other types of financial assets.
These represent participation in loans to private corporations underwritten by commercial banks, including first lien, second lien, and collateralized loan obligations. Bank loans tend to be more risky than corporate bonds but, as a result, can potentially offer higher interest rates.
These funds typically invest in money market instruments and forward currency contracts denominated in the currencies of foreign countries. In addition to carrying credit risk, these funds carry currency fluctuation risk.
Sukuk funds are vehicles that typically invest in debt instruments structured to comply with Islamic law and its investment principles. Historically, sukuk bonds offer less volatility and more downside protection than conventional bonds. They have also grown in size and diversity over the past several years.
Our Approach
We believe global fixed income markets are inefficient. In our view, the best way to seek to exploit these inefficiencies is through a sector-by-sector research-oriented approach, which is integrated globally. We offer investors a wide range of strategies covering benchmark-aware and unconstrained to tailor portfolios that seek to meet a diverse set of client needs.
We focus on sectors where we believe our independent research offers the greatest opportunities to add value for our clients.
We believe fixed income portfolios can best be managed by integrating three perspectives: top-down macro analysis, bottom-up sector analysis and quantitative insights to guide strategy allocations.
We take a long-term view for all we do, from the people we hire, to the markets we enter, to the solutions we offer and to the investment decisions we make.
What Is Fixed Income Compared to Bond Funds?
Fixed income typically refers to a type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule.
Investors traditionally equate bonds with fixed income however there are various types of fixed income instruments including preferred securities, treasury bills, certificates of deposit, guaranteed investment certificates, and mortgage backed securities.
In comparison, bond mutual funds invest primarily in individual bonds. Typically they make periodic dividend payments based on the interest paid by the bonds held in the fund.
Featured Funds
Western Asset Core Plus Bond Fund - Class I
- Asset Class
- Fixed Income
- Total Net Assets
As of 04/30/2026 - $3.65 bn
- Inception Date
- 07/08/1998
- Dividend Frequency
- Monthly
- NAV
As of 05/29/2026 - $9.20
Franklin Federal Tax-Free Income Fund - Advisor Class
- Asset Class
- Fixed Income
- Total Net Assets
As of 04/30/2026 - $7.74 bn
- Inception Date
- 03/20/2002
- Dividend Frequency
- Monthly
- NAV
As of 05/29/2026 - $10.82
BrandywineGLOBAL - Flexible Bond Fund - Class IS
- Asset Class
- Fixed Income
- Total Net Assets
As of 04/30/2026 - $443.26 mn
- Inception Date
- 03/31/2013
- Dividend Frequency
- Quarterly
- NAV
As of 05/29/2026 - $9.50
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Important Information
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- This website does not provide investment advice or investment recommendations. It is intended for educational and informational purposes only.
- All investments involve risks, including possible loss of principal. Generally, those offering potential for higher returns are accompanied by a higher degree of risk. Stock prices fluctuate, sometimes rapidly and dramatically, due to factors affecting individual companies, particular industries or sectors, or general market conditions. Bond prices are affected by interest rate changes. Bond prices, and thus a bond fund's share price, generally move in the opposite direction of interest rates. As the price of bonds in a fund adjusts to a rise in interest rates, the fund's share price may decline. High-yield, lower-rated ("junk") bonds generally have greater price swings and higher default risks. Foreign investing, especially in developing markets, has additional risks such as currency and market volatility and political or social instability. For tax-free income funds, the alternative minimum tax may apply. These and other risks pertaining to specific funds, such as those involving investments in specialized industry sectors or use of complex securities, are discussed in each fund's prospectus. By clicking on the fund name, you will be taken to a more detailed fund information page which includes main investments and risks.
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