Bond funds are the second most common type of mutual fund, accounting for 2,188 of the 8,255 mutual funds at the end of the first quarter of 2001, according to ICI's monthly survey of the U.S. fund industry. During the 1990s, bond fund assets have steadily risen, and increased more than 43 percent since year-end 1995.
Individuals are the principal owners of bond funds.
They accounted for more than 78 percent of all bond fund assets at year-end 2000. Nearly 90 percent of all bond fund shareholders also own equity funds. Bond funds are less appealing when their returns are expected to be reduced by rising interest rates. Net flows into bond funds are sensitive to movements in market interest rates. Net flows are heaviest during extended periods of declining interest rates and high returns on bond funds.