BondIT is the asset management software platform developed for optimizing fixed income portfolio management and ensuring bond funds meet, and even exceed, client investment goals. We can help you to reduce resourcing time and costs with portfolio optimization tools driven by fixed income analytics developed by leading data science and software development methodologies. Generate compliant investment proposals for clients in a matter of minutes, not hours. BondIT is completely data agnostic and capable of integrating with any enterprise system, supporting faster and more cost-effective internal business workflows. Choose to use the standard analytics our asset management tool comes with or work closely with us to design bespoke solutions that both client-specific and support your business.
Once optimized proposals have been generated by BondIT, then fixed income investment portfolios are monitored and analysed for optimal solutions and remain current with portfolio and universe data inputs in real time. This ensures proposals can be transmitted to compliance, reporting and execution systems efficiently, reducing wasted time and resourcing. You remain in control of BondIT’s real time portfolio monitoring and management with permission-based sharing across all enterprise systems. Bond funds management is achieved and optimized through efficient delivery of actionable scenarios generated directly from BondIT quickly. Managers can respond to interest rate risk and other fluctuations in the market instantly, evaluating multiple solutions delivered by BondIT.
How do bond funds work?
Investing in bond funds is a pathway an investor can take to help them improve their investment returns in municipal bonds, government bonds and the corporate bonds market. Individual bonds are essentially debt instruments issued by both private corporations and public entities like the U.S. Government seeking cash flow injections to cover things like public expenditure projects, upgrades or new amenities or for firms that have capitalized heavily and need access to some cash in the interim to cover operational costs. A corporation or government organization, like the U.S. Treasury, issue a bond at a specific bond price. This bond can then be purchased by an investor. The bond will typically have a set maturity date (perpetual bonds are very rare, although they do exist) at which time the capital investment amount – the price the investor paid for the bond – is returned to them. Throughout the term of the bond, regular interest payments, known as coupon payments, are paid to the bond owner.
Fixed income securities like fixed income bonds are considered a relatively low risk investment that produces a regular income for the investor. This doesn’t mean that there is no risk, only that the risk is considerably lower than other, more volatile money markets like the New York stock market. Stock trading is more prone to micro fluctuations in the market than fixed income trade, although the level of fixed income risk is directly correlated to the yield these types of investments offer.
The safest investment an investor interested in fixed income securities can make is in government bonds. These types of bonds are backed by the U.S. Government so credit risk is negligible but there are other types of risk that investors still assume. Tax risk is one of the largest. Many municipal bonds are considered exempt from income tax which means that any income generated by the bond and investor has purchased will not affect their yearly tax assessment. Not all government bonds are tax-free, however, and just because a particular investment might have been exempt from tax when the investor purchased the bond doesn’t mean that it will stay that way. Changes in government can come with overhauls of existing systems and fixed income options that were original tax-free may become taxable before those fixed income instruments mature. When this happens, and investor has a couple of options. They can choose to retain the bond they own and declare the income generated from it as part of their taxable income, sustaining a loss, or they can sell the bond on the secondary market to another investor. It is unlikely, however, that they will achieve the same sale price for their bond that they paid but this may allow the investor to seek other tax-exempt investment opportunities instead, offsetting the loss of income.
Bond issuers also may call a bond early. The federal reserve sets interest rates and when those interest rates are high, investors get excited. The higher the interest rate, the higher the income generated from a bond. In some circumstances, however, the government or a private corporation can call a bond early, returning the initial investment amount to the investor and then issue that same bond again at a lower interest rate. This means that the income on the new bond will be lower than the income projected from the first bond.
Fixed income risk is determined by a bond issuer’s credit rating. The higher the credit rating, the less risk the investment poses to the investor. The yield of corporate bonds can be quite high when the credit rating of the bond issuer is very low. These types of bonds are known as non-investment grade bonds or junk bonds. They are issued by entities with a low credit rating and a high default risk. If the worst should happen and the bond issuer fold before the bond matures then investors risk losing not only the projected income from that bond but the capital investment amount itself. Angel bonds are definitely the best corporate bonds to buy. These types of bonds are issued by an entity with a low credit rating which improves over the term of the bond, securing the high income projected as well as the return of the capital investment at the bond’s maturity date.
Bond funds are fixed income funds and they allow investors to pool their money to generate a fixed income high yield option they might not otherwise be able to afford. Investors can buy into bond funds which hold a range of different bonds and share in the interest payments generated by those bonds. These types of funds are also known as fixed income ETF. An investor can choose a short duration or long term holding as these types of investments are relatively easy to buy into and out of, depending on an individual investor’s objectives.
BondIT has been developed to help portfolio managers and financial advisors manage fixed income assets faster and more effectively. Develop bespoke investment proposals which align to clients’ needs and investment goals in a matter of minutes. Use our advance laddering to better manage income generation and custom-immunize objectives such as a down payment on a new home or vacation property as well as college tuition funds and other idiosyncratic client behaviours. Manage bond funds and rate bonds quickly and easily. BondIT is the intuitive asset management platform that is easy to use and completely customizable. Work closely with our team to develop workflows and integrations which put your business goals first, helping to improve margins and lower fees for investors.
To find out how BondIT can help your business achieve its goals while it supports and exceeds the investment objectives of its clients, contact one of our consultants today. We’ll demonstrate where BondIT adds the biggest value and show you how to tailor your new asset management solution to your business requirements.