Bond fund
Loans to governments and companies, paying regular interest
"The calm anchor of a balanced portfolio."
Avg. yearly return
3–5%
Volatility
Low–medium
Liquidity
High (sell within 1–2 days)
Min. investment
From €50
When you buy a bond fund, you are effectively lending money to governments and large corporations. In return, they pay you regular interest (typically quarterly or annually). Bond funds are far less volatile than stocks — they are designed to preserve capital and generate steady income, not explosive growth.
10-year price history
+9% (2015–2024)Starting value = 100 (index)
Indexed to 100 in January 2015. Based on Bloomberg Global Aggregate Bond Index (EUR hedged). 2022 saw the sharpest global bond decline in 40 years due to rapid interest rate rises.
Risks to understand
Interest rate risk
high riskWhen central banks raise interest rates rapidly (as in 2022), existing bonds lose value because newer bonds offer better yields. The 2022 bond market fell 15–20% — the worst year in decades.
Credit risk
medium riskCorporate bonds carry risk that the company may default (fail to repay). Government bonds from stable countries (Germany, USA) carry almost no credit risk. High-yield corporate bonds carry significant credit risk.
Inflation risk
medium riskFixed interest payments lose purchasing power if inflation rises faster than your bond yield. A bond paying 3% during 6% inflation is effectively losing real value.
Currency risk
low riskEUR-hedged bond funds eliminate most currency risk for European investors. Always check that the fund description includes "EUR hedged" if you hold euros.
How to invest in this asset
Bond funds are bought through the same brokers as equity ETFs — the process is identical.
Decide on your bond type
Government bonds (safest, lower return) or corporate bonds (higher return, more risk)? For most beginners, a diversified global government bond fund is the right starting point.
Look for UCITS bond funds
Search for "UCITS bond ETF" on your broker. Examples: iShares Core Global Aggregate Bond UCITS ETF (AGGG), Vanguard Global Bond Index Fund.
Check the yield and duration
The yield tells you the current income. Duration tells you how sensitive the fund is to interest rate changes — a duration of 7 years means a 1% rate rise causes roughly a 7% value drop.
Use bonds as the stable portion
Most financial advisors suggest holding bonds as 30–60% of a portfolio, depending on age and risk tolerance. They cushion the portfolio when equities fall.
Providers and platforms
Interactive Brokers
Online broker · Min. €0 · FCA, SEC
Largest bond ETF selection. Can also buy individual government bonds directly.
DEGIRO
Online broker · Min. €0 · BaFin (Germany)
Good selection of bond ETFs. Some are included in the free monthly ETF list.
Saxo Bank
Online broker · Min. €2,000 · FSA (Denmark)
Strong bond market coverage including direct government bond purchases.
iShares (BlackRock)
Fund provider · Min. Via broker · Multiple regulators
World's largest bond ETF provider. Available through any major broker.
Vanguard
Fund provider · Min. Via broker · FCA (UK)
Very low cost bond index funds. Available through brokers or directly in the UK.
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Find my best option →All information on this page is educational only. Historical data does not guarantee future results. Provider links are not affiliate links — we receive no commission. Always consult a licensed financial advisor before investing.