What it is
A bond fund is a Unit Investment Trust Fund (UITF) or other pooled fund which invests mostly in bonds.
Such funds are typically classified according to the average term (short, medium or long) of the bonds that they hold. They may also specify if they focus on corporate bonds.
To find out more about the bonds that the fund owns, you can have a look at its prospectus and Key Information and Investment Disclosure Statement (KIIDS). Such holdings may change over time according to the decisions of the fund manager.
What it means for you
Bond funds are seen as matching a Moderate risk profile, and also fit those which are Aggressive. Compared to directly owning bonds, they provide diversification through the proper selection of the assets.
Compared to equity funds and stocks, bond funds tend to have lower growth potential. If you want to put your money in an investment that has both stocks and bonds, you may consider looked at balanced funds.
