Fixed Income Trade
BondIT is the portfolio optimization solution for fixed income trade professionals. We have developed an asset management software solution which helps advisors and managers optimize their fixed income portfolio management strategies, delivering instant investment proposals crafted to not only meet the investment objectives of your clients but also exceed them. Save time and precious resourcing with BondIT, the powerful asset management program that does your analysis for you.
Traditionally, selecting which corporate bonds to buy and navigating the municipal bonds market has been reliant on an individual manager and advisor analysis. The asset management tools used by investment firms and private banks have been offline tools reliant on the inherited knowledge of internal teams and can take hours to produce compliant investment proposals for client review. BondIT is the powerful and intuitive software solution which completes this analysis for you. Using leading data science and software methodologies, we have developed a complete asset management solution which not only completes portfolio optimization for you, it also completes your analysis for you too.
You can choose to utilize the standard fixed income analytics BondIT comes with or you can work closely with our team to develop bespoke solutions that increase the efficiency of your internal workflows and generate instantly compliant investment strategies. Our powerful ‘Solve Anyway’ feature has been specifically designed to produce investment ideas even when constraints seem infeasible. Use BondIT to manage fixed income securities the way your investors need them to be managed. Create custom laddering options as well as protect pre-retirement liabilities for clients seeking flexibility for purchases like new homes, vacation homes and for clients seeking to protect college tuition funds for children and grandchildren. Post-retirement clients require different investment strategies to protect income generated from their fixed income investments. BondIT rapidly reacts to changing environments, producing new optimal opportunities for bond funds and rebalancing fixed income options.
What is fixed income trade?
Fixed income instruments come in two forms: corporate bonds to buy and municipal bonds. Municipal bonds, or government bonds, are considered among the lowest risk investment options for bondholders. Backed by the government, they come with significantly lower credit risk and some government bonds are even offered as tax-free income sources. However, the role of the portfolio manager is to manage and mitigate fixed income risk and they do this by seeking diversified investment portfolios which ideally generate sustainable sources of income, high returns for investors and stable re-investment opportunities when bonds mature.
Even municipal bonds, however, come with inherent investment risks. The biggest risk to these types of fixed income assets is interest rate risk, changes to tax offsets and inflation risk. Interest rate risk is the risk an investor assumes when they purchase a callable bond at a high-interest rate. The higher the interest rate, the higher the regular interest payments the bondholder receives. Ideally, fixed income trade opportunities are better when interest rates are higher. However, a callable bond is a type of fixed interest asset which can be called before the maturity date of the bond. If interest rates lower over the term of the bond, then the bond issuer may seek to call the bonds and then sell new bonds at a lower interest rate. When this happens, the investor has their initial capital investment returned to them early, effectively removing that source of income from their portfolio over whatever original projected term the bond had been issued for.
Inflation risk occurs when the level of inflation increases to a percentage higher than the interest rate offered. This means that the income generated from the bond is worth less than originally projected.
Finally, tax risk occurs when a government bond that was originally ranked as tax-free become taxable. Changing governments can change which bonds are considered tax free throughout the term of the bond making the income generated from the investment suddenly taxable.
The corporate bonds market is considered slightly riskier than government bonds. Corporate bonds are essentially debt instruments offered by companies in search of a cash flow injection. They will come with a credit rating – just like government bonds – which may be good or poor. Poorer credit ratings will create higher interest bonds, but this is because the corporate bond on offer has a significantly higher risk of default than other lower rate bonds. These types of bonds are typically issued by start-ups or overcapitalized firms. The yield of corporate bonds of this type is substantially higher but should the business issuing them fold before the maturity date then the investor may not see any coupon payments or, indeed, recoup their initial capital investment. To offset the potential for high risk fixed income bonds not generating income, advisors and managers will seek to create mutual fixed income funds and fixed income ETFs as well as look at opportunities within other money markets. BondIT helps managers and advisors rate bonds and cultivate investment portfolios based on the objectives of their investors right from the start.
What can BondIT offer your business? To find out more about how BondIT works and how it can significantly increase your efficiency and reduce resourcing time, contact one of our consultants today. We will walk you throughout BondIT’s complete list of features and demonstrate how managers and advisors have already benefited from our intuitive and powerful asset management solution.