Looking at a bond index fund Key Investor Information, I have found this:
Income from the Fund will be reinvested and reflected in the price of shares in the Fund
I don't fully understand it. As far as I understand, the point of bonds is that they are fixed income assets (they provide a fixed income on a yearly/monthly basis), so if the income is reinvested, this property is not applicable to bond index funds, right?
They provide nothing unless you're able to sell for a higher price than you bought, is this correct? If so, what is the difference with an index fund?
After investigating a bit more (see https://www.fidelity.com/learning-center/investment-products/mutual-funds/bond-vs-bond-funds ), as far as I can see, there is no difference between stock funds and bond funds (if they both reinvest dividends/income) with regards to the fixed income feature. Neither of them will yield any benefit on a monthly/yearly basis (unless you manage to sell them for more than you bought them)
I assume that the quote above (reinvestment being reflected in the price of the shares) means that the fund's NAV will get bigger because of such reinvestment, so in the end, you will get all that reinvested income when you sell because it is included in the sale price. Is this correct?
If so, how is that bond index funds are 'safer' than stock index funds?