Bond Funds are nothing but one form of debts as much as similar to your home loan where you borrower money from bank and in return you pay interest with principle amount. When a state or city issue bonds to raise money for building infrastructure like constructing roads, dams, bridges, etc with a fixed maturity and assured return are called as Government Bonds. Whereas corporate issues bond to raise money for expansion like purchasing companies, expanding presents geographically, introducing new products, etc with a fixed maturity and assured return are called as Corporate Bonds.