Fixed Income Bonds

bondIT’s technology has been designed for optimizing fixed income bonds and fixed income portfolio management. bondIT’s Frontier is an intuitive and powerful asset management software solution that takes the guesswork out of managing fixed income funds for portfolio managers and advisors. BondIT has been developed using the latest data science and software development methodologies to produce a user-friendly interface through which advisors and managers can dramatically increase their efficiency and not only meet the investment goals of their clients but exceed them too. 

How do Fixed Income Bonds Work?

Fixed income investments come in a variety of forms from individual bonds to mutual bond funds and fixed income ETFs. It is the role of investment portfolio managers and advisors to manage bond market opportunities for their investors and BondIT assists by developing instant investment proposals and rebalancing options driven by the needs of the client. Easily identify investment grade and non-investment grade bonds, navigate the secondary market and mitigate investment objectives risks with in-depth analyses delivered by bondIT. Our credit analytics technology does your analysis for you, freeing up teams to focus on responding to market trends and producing instantly compliant proposals for client review. 

What are Fixed Income Bonds?

Fixed income bonds are a type of investment which comes in the form of either corporate bonds or municipal bonds. A fixed income asset is essentially a debt instrument offered by either a government organization or a corporate entity seeking capital investment. In return for purchasing fixed income securities, the government organization or corporate entity promises to return the capital investment about at the bond’s maturity as well as make regular interest payments (known as coupon payments) throughout the life of the bond. This makes fixed income instruments attractive investment opportunities for investors seeking regular income and low fixed income risk investment opportunities.

Government or Municipal Bonds

Not all fixed income bonds are equal, however. Government or municipal bonds are considered the lowest risk with treasury bonds even offering tax offsets for investors. Because these types of investments are relatively low risk, they don’t offer very high returns for investors. Government bonds are unlikely to destabilize before the maturity date and the risk of default on the bond is very low. Investors are still subject to interest rate risk, however. When an investor purchases a bond, they do so at a particular interest rate driven by market factors. This interest rate guarantees the income generated for the investor and projects a total return on the bond. Should interest rates lower over the term of the bond then the bond issuer may seek to borrow at the new lower interest rate. They may call the bond early, returning the capital investment an investor has made and effectively eliminating any further income generated by that bond. They may issue new bonds at a new, lower interest rate, significantly lowering the total yield of the bond for the investor. 

Even given this inherent risk with municipal bonds, investment portfolio managers are still likely to include these types of bonds in a diverse portfolio to help maintain wealth generation as steadily and as low risk as possible.

Corporate Bonds

To balance out the low risk and low return municipal bonds, a diverse portfolio may include a selection of corporate bonds to buy. The yield of corporate bonds is generally a lot higher than government-issued bonds due to the higher credit risk a corporate bond poses over government-backed fixed income bonds. Not all fixed income bonds available to purchase on the corporate bonds market are high risk, of course, but junk bonds or non-investment grade bonds are amongst the highest risk and the highest return opportunities. These types of bonds are issued by corporate entities such as start-ups or overcapitalized firms seeking cash flow for their business. The credit risk is usually very high on these types of bonds, driven by credit ratings issued by independent credit rating agencies. The risk of default is typically very high with sometimes only a portion of the bond returned once the issue liquidates its assets and distributes the proceeds among its creditors. 

Portfolio Diversification

To maintain diversification, portfolio managers and advisors will seek to diversify investment opportunities to include fixed income high yield bonds as well as lower yield, less risky investments. To manage bond allocation, they’ll use a range of fixed income analytics to determine the smartest way to invest on behalf of their clients. This process typically takes hours of analysis to achieve with investment proposals then painstakingly developed for client review. BondIT changes all of that. You can choose to use the standard range of analytics included within our asset management program or you can work closely with our team to develop client-specific and business-specific analytics driven by the objectives that you’re looking for. 

BondIT is completely data agnostic, capable of integrating with any enterprise system instantly. It has been developed to work within your workflows and increase speed and efficiency by generating compliant investment proposals in a fraction of the time it typically takes teams to complete in-depth analysis using whatever internal programs and asset management tools they have created. Generally, these tools are offline and unable to integrate directly with compliance workflows and other systems, increasing the time it takes to develop proposals for fixed income options, get them reviewed and implemented. 

To find out how BondIT can increase your team’s fixed income trade efficiency, generate wealth for your clients and generate instant portfolio optimization, speak with one of our team today.