Manage fixed and floating rate bonds with BondIT. BondIT is the intuitive technological solution for fixed income portfolio management, including the management of fixed income bonds like municipal bonds, government bonds and the management of opportunities within the corporate bonds markets. BondIT offers portfolio managers and financial advisors a faster and more efficient method for portfolio optimization and analysis. Using leading data science and the latest software development methodologies, the BondIT asset management software is designed to reduce time and resourcing costs for asset management firms and client managers eager to reach and exceed investment objectives for fixed income ETF as well as individual bonds. Develop workable rebalancing options and investment strategies in a matter of minutes rather than hours, delivering actionable and compliant fixed income fund proposals fast. BondIT is data agnostic and is capable of seamlessly integrating with compliance, reporting and execution systems to deliver compliant strategic investment proposals faster than ever imagined.
What is fixed income investing with rate bonds?
Fixed income trade is investing in fixed income securities like bonds. In return for purchasing a bond, the bond issuer commits to paying regular interest payments (also known as coupon payments) for a set term and then at the end of the term, when the bond matures, they return the initial investment amount. There a range of fixed income assets to choose from including municipal and government bonds, and the corporate bonds market. Bonds are fixed income investment opportunities issued in the form of debt securities by states, municipalities or counties to finance capital expenditure projects, or by private corporations seeking cash flow investment to cover things like expansion and operating costs for over-capitalized businesses. Government bonds also include Treasury bonds issued by the U.S. Government.
A bond is issued at a bond price determined by the credit rating of the issuer. Government bond opportunities are particularly attractive for investors for a range of reasons, among them the excellent credit rating that comes with U.S. government-backed bonds. For example, some government bond investments are tax-exempt, making them ideal for investors in higher income tax brackets. However, just because a bond may have initially been issued with a tax exemption, doesn’t necessarily mean that the income generated on that bond will remain tax-free. Occasionally, government bonds can change their tax status before the bond’s maturity date has been reached. In these instances, an investor can choose to retain the bond and accept the loss or sell the bond on the secondary market to another investor.
Within the municipal bond market, there are two types of bonds available: general obligation bonds (GO bonds) and revenue bonds. These categories relate to the source of interest payments they generate for investors. For example, revenue bonds may be issued for the building of public amenities such as highways. These projects are then backed by the revenue generated for the use of the highway in the form of tolls. General obligation bonds are not backed by specific revenue streams such as tolls collected by highway users. They may be backed by property taxes or maybe payable from general funds. Should the bond issuer be unable to meet their payment commitments then they have several avenues to explore to raise the funds, including raising taxes or selling assets. If they default on their payments then the judiciary manages this default risk, empowered to order the GO bond issuer to undertake immediate action and meet their obligations.
Revenue bonds are structured differently and are guaranteed by specific revenue streams. For example, if bonds are issued to cover the capital investment costs associated with upgrading existing government facilities like trains or buses. The bonds cover the cost of the investment required and the bondholders are paid their interest payments throughout the term of the bond using the revenue generated by the new transportation systems. Revenue bonds may also be issued by other government services such as water treatment authorities. Investing in essential services is also considered low risk as essential service providers can easily increase their costs to customers to cover their investment commitments. Customers are unable to source other essential service providers, so price increases are unlikely to result in losing customers to competitors.
These types of fixed income securities also come in riskier options. When a governing authority issues bonds to finance the building or upgrading of, a hospital then the revenue stream earmarked for paying its investors is not quite as secure as for essential service providers like power and water providers. Hospital patients can choose to shop around for the lowest cost medical treatment services, and this can mean that newer hospitals, even equipped with better facilities, may not be able to generate enough revenue to cover their operating costs as well as repay their investors.
Other fixed income risk associated with municipal bonds includes interest rate risk and inflation risk. Interest rate risk relates to fluctuations in interest rates set by the federal reserve. If interest rates drop significantly during the term of a bond, then the bond issuer may be able to call their bonds early. This means that they return the capital investment amount their investors gave them when they purchased their bonds and then reissue bonds with a lower interest rate. Investors then miss out on the projected income stream at the first interest rate and must choose to either reinvest at the lower interest rate – meaning the lower income generated – or search for other fixed income options such as fixed and floating rate bonds.
Corporate bonds work the same way that municipal bonds do but the perks and risk profile is a little different. Corporate bonds are issued by private entities looking to invest in business growth such as research and development opportunities, new branch offices, etc. They guarantee the payment of these bonds with sales, operations and other assets that they may own but these types of bonds are typically higher risk than municipal bonds. Of course, higher risk typically equates to higher returns. The corporate bonds market may appear to offer investors higher yields and returns on their investments and the high yield of corporate bonds may be enough to outweigh the risks.
It is the role of the portfolio manager and the financial advisor to devise strategies for fixed income trade options which meet their clients’ goals and investment objectives. As fixed income securities managers, financial advisors and portfolio managers have traditionally had a hard time analysing and presenting viable investment options to their clients. BondIT helps to reduce that time and those resources by delivering a holistic asset management program capable of analysing multiple data points and generate optimized investment proposals aligned to client needs and requirements.
Analysis has been typically performed by bond managers who devise fixed income investment strategies using internally created systems and workflows as well as offline spreadsheets. Generating viable fixed income high yield investment proposals may have taken hours to build, increasing the strain on business costs and reducing efficiency. Rather than responding to changing market conditions, portfolio managers have had to spend much more time developing portfolio optimization strategies. BondIT is designed to give portfolio managers back that precious time and resourcing power, eliminating the need for complex offline analysis.
BondIT is the intuitive technological solution to common problems faced by all asset and wealth management firms. BondIT increases business efficiently, helping to manage ongoing margin compression from fee erosion, regulatory pressure and increasing competition. Rapidly improving productivity and efficiency saves valuable hours of work with instantly compliant proposals aligned already to individual investor needs and through the use of automated workflows. We help businesses manage the most expensive parts of the customer value chain.
We offer asset management software that digitizes fixed income analytics to return instantly workable fixed income risk analysis. As an API-first platform, our software solution includes a full set of API’s to perform all portfolio management tasks, including optimization. We have designed our asset management tools to be data agnostic so managers and financial advisors can leverage BondIT’s optimization engines from within the systems that they currently use. Seamless integration is achieved through intelligent design, seeking to increase the efficiency of workflows and free up valuable resourcing time and capacity. Client managers can spend more time doing what they do best while portfolio managers can concentrate on developing faster and more efficient investment strategies for fixed and floating rate bonds for example.
BondIT can be accessed anywhere and anytime without any further software licencing obligations. Rely on powerful insights driven by intuitive data management and efficient workflows. Our Intuitive User Experience is specifically designed to ensure that everyone who uses BondIT achieves the same functionality and powerful investment management, delivering income asset management strategies which return real results for investors, increasing total return. As a data agnostic system, it integrates with any enterprise system cleanly and efficiently, as well as any portfolio management workflow. This makes it an agile system capable of delivering results for every manager using any system. Find out how BondIT can help your business manage fixed and floating rate bonds, as well as bond funds, as part of their investors’ portfolios, optimizing investment opportunities rapidly and more cost-effectively than ever before. Contact a consultant today to discuss how we can help your business reach and exceed its goals.
BondIT Walkthrough – Platform Introduction
Watch an introduction to the BondIT asset management platform.