Question

What are some of the pros and cons you should be aware of if you are an investor for a pension fund and given the following scenario and deciding whether to invest or not?

-A portfolio of CMBS bonds issued in 2018 with the bonds maturing up to 2028 depending upon tranche. Assume you are looking at the investment grade tranches with a 3.7% to 5% yield.

Answer 1

PROS AND CONS OF A HIGH YIELD RETURN BONDS

                             Todays world the stock prices are generally go up faster than bond prices, but they are also more risky.

the bonds which are loans to governments and businesses that issue them, are often called good investment for older investors who need to relay on steady interest incomes. As far as the above discussed portfolio of CMBS BOND provides high yields returns will more effective one

          we discuss main pros and cons of a bond investment

        ADVANTAGES OF BOND FUNDS

1- the bonds are generally offers periodic interest incomes, it may be coupon rate or interest rate.

2- the bonds are ideal investment portfolio for retirees who depend on the interest income for their living expenses and who cannot afford to lose any of their savings.

3-sometimes bond prices benefits from safe haven buying, which occurs when investors move funds from volatile stocks to the relative safety of bonds.

DIS ADVANTAGES OF BOND FUNDS

1-One of the did advantages of bond fund is the rising of interest rates and credit risk.

2- the other did advantage is that bond prices rises when rates fall and fall when rates of bonds rises.

3-sometimes your bond portfolio could suffer the market price losses in a rising rate environment.

4- the bond market volatility could affect the prices of individual bonds, regardless of the issuers.

5- some bonds have call provisions, which give issuers the right to buy them back before maturity.

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