Ch.11 · Comparing Fund Performance · medium
What is 'accrual income' in a debt fund, and how does it relate to credit quality?
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EXPLANATION
Accrual income is the coupon/interest income earned as bonds are held. Credit risk funds and medium duration funds often pursue an accrual strategy by holding lower-rated bonds that pay higher coupons. The trade-off is that lower-rated issuers carry higher default risk.
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