How fixed income investments work

Fixed income investing is a popular approach which involves income generation and capital preservation.

deVere Group offers a wide variety of fixed income assets which track different asset classes. These include ETFs, mutual funds, individual stocks and cryptocurrencies. Clients can opt for guaranteed or variable income solutions. Fixed-income assets often form a key part of a diversified portfolio.

What are the main benefits of fixed income investing?

Fixed income investing solutions offer a wide variety of benefits which are particularly suited to certain investors seeking regular interest payments.

Product suitability is always dependent on a client’s investment strategy. Click here to register for a financial goal planning session.

How does fixed income investing work?

Fixed income investing solutions allow clients to enjoy income certainty, as the income amount is predetermined. Fixed income investing is generally considered less risky than investing directly into other securities such as stocks, bonds, or mutual fund ownership.

Fixed-income investment solutions allow clients to invest a lump-sum amount into a product which has pre-set features. These features include:

Product term

Every fixed income product has a pre-set maximum term. The shortest products last for one year, with long-term options lasting up to seven years. Many products have the option to mature early.

Income amount

The product will have a pre-determined income amount, on the cautious end of the spectrum. This is between 4-6% per annum. Growth-focused fixed income products, also known as high-yield bonds can yield up to 30% per annum.

Strike date

Fixed income products are continuously available. However, the offers vary depending on market conditions. All products have a strike date. This is when the offer closes and the product becomes live.  

The benefits of fixed income investing

  1. Income generation

Fixed income investing allows clients to generate a regular source of income. The income amount is a fixed percentage amount based on the initial capital which is invested. This income/yield is paid to clients on either a quarterly, semi-annual, or annual basis. 

2. Capital protection

Fixed income investing allows clients to offset a significant amount of risk from their portfolios through the use of capital protection. This feature ensures that the client’s initial capital remains entirely protected in an event where the market has fallen by a significant amount. This allows clients to enjoy a steady income in bearish market conditions.

3. Diversification

Fixed income investing solutions track a wide variety of underlying assets. deVere Group offers stock, mutual fund/UCITS, ETF index-based and cryptocurrency fixed income products. As a result, clients can enter solutions that track assets which are negatively correlated with their portfolio, providing diversification.

4. Attractive returns

Fixed income products pay clients attractive fixed returns between 5-30% per annum. Clients can seek higher returns by assuming greater levels of risk based on the choice of underlying assets. Generally, the more volatile the underlying assets, the higher the rate of return clients can expect.

5. Investor security

All fixed income products offered by the deVere Group are issued by some of the world’s leading investment banks. Only banks with excellent credit ratings are selected. This ensures issuer risk is mitigated as much as reasonably possible.

What are the risks?

All investments carry some element of risk, and fixed-income investments are no different. There are four notable risks associated with fixed income investing. These are liquidity, inflation, issuer, and underlying asset risk.

  1.  Liquidity risk

Fixed income investments come with pre-set terms, between one to seven years. Client capital remains invested until the product matures. The risk, therefore, is that the client may require emergency access to the capital before maturity.

The client does have the option to sell the product before maturity on the secondary market. Secondary market values are calculated using the underlying asset value. To mitigate this risk, clients are advised to only invest capital not required over the medium term.

2. Inflation risk

Inflation is another type of risk for fixed-income investors. Fixed income investments pay clients a pre-determined amount which is paid on a regular basis. However, if the rate of inflation outpaces the notes income amount, the investor will lose purchasing power.

3. Underlying asset performance

All fixed income products have a maturity date. On the maturity date, the product’s underlying assets are required to be on or above the product’s protection barrier.

4. Issuer risk

All deVere’s fixed income products are provided by leading investment banks which are selected based on their credit ratings. Only investment banks with exceptional credit ratings of investment-grade and above are selected. This selection process seeks to mitigate the risk of default.

Should you wish to learn more about any of the risks listed above, please click this link to be put in touch with an advisor.

How to invest in fixed income products

deVere Group’s fixed income solutions are available via a range of different investment platforms. Please contact your financial advisor for guidance. If you are not a client, please click here to be put in touch with an advisor.

Fixed income portfolio manager

Clients can opt to invest in fixed income assets on an execution-only basis, whereby they place their own trades. Or they can choose to seek the advice of a fixed income portfolio manager. A fixed income portfolio manager will examine your entire portfolio and make recommendations based on your growth objectives and risk capacity. This service allows clients to enjoy all the benefits of fixed-income products, without requiring technical knowledge. Click here to register your interest.

Execution-only fixed income investing

The fastest and easiest way to gain access deVere Group’s fixed income products is via the deVere Investment App. The app allows users to deposit funds in EUR, GBP and USD and trade seamlessly. The app is available on both Android and iOS. For more information on the deVere Investment App please click here.

Why deVere Group?

The deVere Group is one of the world’s leading independent financial institutions. Over the past 20 years, deVere Group’s team of advisors have offered clients across the globe a powerful combination of personal financial advice and innovative digital solutions. deVere’s investment team has continuously produced some of the industry’s top-performing fixed-income assets.

Further information about deVere Group’s fixed income solutions is on the Structured Products page

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