Which type of fixed income fund has a short duration, with the objectives of preserving capital and generating better current income than a money market fund?
A short-term bond fund combines characteristics of money market and bond funds, aiming to preserve capital while generating higher income than a money market fund due to its short duration. The feedback from the document states:
" A short-term bond fund is part money market fund and part bond fund. You would expect its investment objectives to reflect this combination. A short-term bond fund’s objectives are to preserve capital and generate better current income than is likely from a money market fund. Although there is some capital gain potential, you would not expect this to be a key objective given the short duration of this type of fixed-income fund. "
[Reference: Chapter 11 – Conservative Mutual Fund ProductsLearning Domain: Analysis of Mutual Funds, , , , ]
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