What is fixed income?
Fixed income is a catch-all term for investments within the world’s debt and credit markets. It is also a style of investment that has traditionally been associated with helping to mitigate against capital loss.
The most common fixed income investment is referred to as a bond. A bond sits within a portfolio’s fixed income allocation alongside products such as cash and term deposits. These assets are classified as income assets as they provide a steady and generally reliable stream of income.
There are different types of bonds, including government bonds and corporate bonds.
A bond operates like an IOU, whereby you lend your money to an issuer for a set period of time in return for interest payments over the term of your investment. If all goes well, your investment, or capital, is then paid back to you in full at the end of the term known as ‘maturity’.
Our approach to fixed income
We believe the key to superior long-term returns in the fixed income market is a focus on avoiding capital loss, while at the same time compounding the income streams from existing holdings.
We aim to achieve this through fundamental credit analysis of the bonds we hold and macroeconomic research. At the heart of our investment approach lies a robust, repeatable, global investment process, focused on the monitoring of risks. We understand credit, interest rate and market risk and, where possible, monitor against these risks in an effort to deliver consistent performance to our clients.
From our origins managing core assets, our Fixed Income teams now cover the majority of the fixed income spectrum.
Hans Stoter, Global Head of Core Investments