Fixed Income Instruments
BondIT is the asset management software designed specifically for investment firms and businesses. We have developed a powerful asset management tool which empowers fixed income portfolio management professionals to produce faster, more accurate and more cost-effective solutions for portfolio optimization and advanced laddering for fixed income instruments.
What are fixed income instruments?
Fixed income instruments, or fixed income securities, are a type of investment which provides a regular return in the form of fixed interest payment as well as the eventual return of the principal investment bond fund at the bond’s maturity. The payments for fixed income options are known in advance, unlike other variable-income securities. Fixed income products offer investors a reliable stream of fixed rate periodic interest payments (known as coupon payments). Bonds are the most common form of fixed income instruments and they are available as municipal bonds, government bonds and corporate bonds to buy. Not all fixed income investments, however, are created equal. There is a range of factors which help to rate bonds and these ratings can influence the viability of a bond including the interest rate risk, the credit risk associated with individual bonds or the issuer.
The U.S. Treasury guarantees government fixed income bonds, and these are considered very low risk, however, this also means they offer relatively low returns on investments when compared to other fixed income high yield bonds.
Essentially, all fixed income instruments are debt instruments which help companies to raise the capital they need. A company will issue a bond for a specific price which is purchased by the investor. The bond funds generated are used by the bond issuer for whatever capital needs they have in return for regular interest payments to the investor and, finally, the return of the investment at the bond’s maturity. Bonds can have a range of maturities (short term and long term) and face value amounts. The face value is the amount the investor will receive when the bond matures.
Investing in fixed income securities can be a reliable way of generating fixed income however it’s important to understand the various grades assigned to bonds issued and how these grades may ultimately affect the bond paying anything at all. Fixed income options can be either investment grade or non-investment grade bonds. Investment-grade bonds are generally issued on the corporate bonds market by stable entities with a good credit rating assigned by a credit rating agency. Similarly, government bonds are generally considered investment grade bonds.
Investment-grade fixed income trade options are issued with a low risk of default, so they have a lower interest rate correlate to the risk. This means that the income generated from these types of bonds will generally be lower than non-investment grade bonds or junk bonds. Junk bonds are fixed income high yield investments which have a low credit rating proportionate to the probability of the corporate issuer defaulting on the interest payments it owes. In return for accepting the higher risk on these types of bonds, investors see a higher interest payment. Diverse bond allocation ensures that an even level of risk is assumed across an entire investor’s portfolio, helping to offset the risk of default with lower-paying but more secure fixed income instruments.
BondIT is the asset management software designed to help advisors and portfolio managers to more quickly optimize investment portfolios and respond to changes in the market. Using our fixed income analytics, you can fully customize how portfolios are managed and optimized. Choose either the standard features that BondIT comes with or work with our team closely to develop analytics and features which more accurately reflect your business practice and align with your business goals and investor goals.
Using BondIT, you can rapidly generate fully optimized and compliant portfolios leveraging alternative data, proprietary insights, mandates and inventory. When you use BondIT to create investment portfolios, all of your investment objectives and mandates are taken into account. This powerful software measures fixed income risk to deliver instant and actionable proposals compliant from the moment of creation.
Using the same intuitive interface, BondIT also delivers game-changing advanced ladders. Build both custom or standard ladders of municipal bonds, corporate bonds and governments – as well as a fully diversified portfolio – aligning your clients’ needs instantly. BondIT’s income ladder tool was designed with the flexibility to generate bond ladders and income streams in whatever frequency and amount a client requires to align with idiosyncratic gifting, philanthropic, or other requirements. BondIT allows for portfolio parameters and bond level constraints to all be based on benchmark relative inputs. Portfolios and proposals can also be compared across all analytic fields for enhanced client engagement.
Our portfolio management software also helps to generate multiple solutions for trade-off analysis. Using our fixed income portfolio management platform, funds’ managers can review multiple investment strategies delivered quickly and efficiently rather than after hours of intensive offline analysis. Traditionally, this review process is reliant on internal workflows and offline systems but with BondIT you remain in control of real-time portfolio monitoring and management with permission-based sharing across all enterprise systems.
To discover how BondIT could help your business to increase efficiency, reduce costs, save valuable time, and help you achieve and exceed the goals of your fixed income instruments investors, contact one of our consultants today. We can take you through how BondIT is deployed and how we can tailor our intuitive, easy to use software solution to your business needs and workflows. Contact us today.