Fixed Income Investments

What is Fixed Income?

When you invest in a Fixed Income product, this means that the issuer of the investment – the borrower – is obligated to make fixed amount payments to you on a fixed schedule, as well as to return the principal amount you had invested at maturity. 

This is in sharp contrast with stocks and shares, where there is no obligation to pay dividends or any other form of income. 

Fixed Income products are generally understood to carry lower risks than stocks; however, since the risk is lower, they may not offer the largest potential return. They can play an important role in a diversified, balanced financial portfolio. 

Some common Fixed Income securities include Structured Notes, Fixed Rate Bonds, Corporate Bonds, Municipal Bonds, Treasury Bonds, Bond Funds and Certificates of Deposit.  

What are Fixed Income Investments?

Fixed income funds are suited to those investors with a lump-sum who would like to earn a fixed income on a deposit, as they provide a steady income stream and more stable returns than stocks.

When you buy stock, you buy ownership in a particular company. On the other hand, with fixed income investments, you are lending to the issuer – a government, corporation, or other entity – much like an IOU. Unlike when you buy stocks, you are not entitled to a share of the issuer’s profits. 

In exchange for this ‘loan’, you get a benefit, usually in the form of regular fixed rate interest payments, until your money is repaid after a set period of time. Although fixed income investments carry less risk than some other types of investment, they can lose value over time due to inflation. 

Want to know how Fixed Income investments work? Check out our exclusive guide HERE.

Fixed Income vs Equity

Both fixed income and equity products are financial instruments that can help investors achieve their financial goals and diversify your portfolio. These types of investments have their respective higher or lower risk-and-return profiles and there are some major differences between them. 

Fixed Income  

Equity  

Consists of Bond securities issued by the government, Corporate Bonds, Municipal Bonds, and mortgage debt instruments. 

Involves the purchases and sales of stocks conducted on regular trading exchanges. 

 

Seen as less risky than equity investments. As such, they typically offer lower potential returns. 

Can experience considerable price highs and lows. 

No voting rights for holders. 

Equity holders generally have voting rights. 

No dividends paid. 

Dividends paid at the discretion of management. 

What are Fixed Income notes?

Fixed Income notes, also known as Structured Notes or Structured Products, are a pre-packaged investment strategy which produce a return for investors by exposing their lump-sum to certain financial markets or individual stocks. 

Structured Notes usually have a set term of usually between three to six years; they may provide an income and there is a capital guarantee.  

They provide investors with fixed upsides and downsides at the beginning of the product of the term. The amount you can earn from the product is outlined. On the cautious end of the spectrum, notes yield between 3.5-5% per annum. Balanced notes 5-10%, and growth focused 10% and above. 

Rather than the issuer’s own cash flow, payoffs are derived from the performance of one or more underlying assets. Issuers normally pay returns on structured products once they reach maturity. They generally offer no principal guarantees. 

At deVere Group we offer a broad selection of fixed income products which track diverse asset classes, including include mutual funds, ETFs, cryptocurrencies, and individual stocks.  

 How do Structured Notes work?

Structured Notes work by offering investors a fixed return which is dependent on certain market conditions. These conditions generally depend on major markets maintaining 80% or 90% of their value. This means investors can earn a fixed return (cash coupons), usually paid on a quarterly basis, even in a scenario where major underlying markets drop by 20%. 

They are most suitable for clients who wish to minimise the impact of market volatility on their portfolio and who are prepared to invest medium to long term. Structured notes also allow clients to understand exactly what they can expect to earn from the product. They come with a low entry cost, and they are available in USD, EUR & GBP. 

The return is produced by tracking indices, for instance the FTSE 100 or NASDAQ and stocks, for example Apple and Netflix. 

Highlights of Structured Notes:  

  • High fixed returns between 4% and 20% per annum.
  • Savings products between 2 to 6 years.  
  • Held with A+ credit rated investment banks.
  • Offering the ability to earn returns in flat, rising or slightly falling market conditions.

How to buy Structured Notes

Structured Notes can be accessed via the deVere Investment App and within certain platforms including portfolio bonds. You can also contact one of our expert financial advisors for more information.

Structured Products Investment Benefits and Solutions

Key benefits of Structured Notes include: 

Growth: Fixed income notes outline the growth you can earn at the start of the product’s operation. 

Protection: Enjoy capital protection from market downturns, that allow you to receive an income even when markets are flat or falling. Structured Products include memory features. This means that if coupons are missed due to a dip in the market, they will be back paid when the market returns above the coupon barrier.

Security: Invest your wealth into investment solutions with the highest credit ratings. 

Traditionally, fixed income investing tools such as Structured Notes were only available to institutions or investors looking to deposit upwards of $1,000,000. However, in recent years due to advances in Fintech, investors can now access fixed-income investment products from $10,000 and above. 

Investors trust the deVere Group to grow their assets.

Our aim is to deliver an excellent service to our clients via comprehensive and diverse exclusive financial products. The investment team at deVere group has consistently made available several first-rate fixed income products to its clients.

Contact us today for more information and to get started and a member of the deVere Group team of financial advisors will get back to you.

Are Bonds Fixed Income Securities?

Fixed income securities are more commonly known as Bonds; probably the best known of all the Fixed Income products. They usually have a fixed term and promise a semi-annual coupon/interest payment to the investor. 

A company or governmental entity receives a loan from investors in exchange for a Bond and is then obliged to repay the amount borrowed by a specified date, together with a fixed rate of interest.  

Bonds have fewer risks than stocks, but a lower rate of return; however, they do carry certain legal protections for investors that equity securities do not. For example, in the event of a bankruptcy or insolvency, Bond holders are usually repaid before shareholders, who often receive nothing at all. 

Why are Bonds known as Fixed Income Investments?

There are two main kind of Bonds – Corporate Bonds and Government Bonds. With a Corporate Bond you lend money to a company for a set period and receive interest payments at regular intervals in exchange. You can either receive a fixed or floating rate of interest. A fixed rate means you receive the same amount of interest throughout the life of the bond; with a floating rate of interest this may go up or down over time. 

Your initial investment will be repaid to you on a pre-determined date, known as the maturity date. The maturity date can vary between three, five, 10 years in the future or even more. 

A Government Bond works in the same way but you are likely to receive a lower rate of interest because lending to a government is considered more secure than lending to a company. 

Bonds are popular with investors because of the appeal of a steady income with regular interest payments (known as ‘coupons’, and usually made twice a year), an element of capital protection and their stability, as they are considered to be less risky than equities. 

Building a portfolio of Bonds can be tricky business. Contact deVere’s highly experienced financial advisors today.  

FAQs 

Why invest in Fixed Income? 

Fixed income normally carries less risk than some other types of investmentsand they can be a good choice for investors who may want a steady source of income. However, as with any other kind of investment, there are some risks involved. Before making any kind of investment decision, always consult the experts. 

What are Fixed Income Products? 

Fixed income products, such as Structured Notesnormally generate a stream of interest income and/or promise a future lump sum payment. Including them in your investments is a good way to diversify your portfolio. 

What are the benefits and risks of Fixed Income Bonds? 

The main advantages of Bonds are the regular income that they can provide you with, as well as them tending to pay a higher rate of interest than cash investments. They are also considered as usually being a safer investment than investing in stocks. On the flip side, if you want to sell a Bond before its maturity date, you may not get back the full amount that you invested.

Additionally, if the company or government that issues a Bond runs out of money, you may not get back all that you invested. However, if there is any left, Bond holders will be paid before shareholders.  

Are Structured Notes a good investment? 

Structured Products tend to appeal to the investor who is interested in a ‘buy-and-hold investment’ rather than a quick way to get a ROI. As with any other investment, there is always a degree of risk involved: the higher the potential return, the higher the risk. One common risk is a relative lack of liquidity that comes with the highly customised nature of the investment. Let deVere guide you to make the right decision. 

The deVere Group of Companies, is licensed in various jurisdictions, however, the products and services offered by the respective entities may vary per jurisdiction. The deVere Group does not warrant, either expressly or implied, the accuracy, timeliness, or appropriateness of the information contained on this website. The deVere Group disclaims any responsibility for content errors, omissions, infringing material and any responsibility associated with relying on the information provided on this website. For more country-specific products and services offered by the deVere Group of Companies, you may wish to visit the specific national deVere website, if and where available. The information contained in this website is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved and your country of residence. Before making any decision or taking any action, you should consult a deVere Group Financial Advisor.

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