A more predictable approach to investment income.
Fixed-rate bonds can provide greater certainty over the rate of income due over an agreed term. They may suit investors looking for a defined return and a clear maturity date as part of a considered investment approach.
What is a fixed-rate bond?
A fixed-rate bond is an investment issued by a government, bank or company. In general, the investor lends money to the issuer in return for a stated rate of interest, normally paid at agreed intervals, with repayment scheduled at maturity.
The precise structure varies. Some bonds may be tradable before maturity, while others may be difficult or costly to sell. Certain products described commercially as "bonds" may have different legal structures, features and protections, so the product documentation must always be reviewed carefully.
Who might consider fixed-rate bonds?
Depending on the specific product and suitability assessment, they may be considered by clients who:
- Want a defined income stream
- Can commit funds for the relevant term
- Understand that a bond is an investment rather than a bank deposit
- Can accept issuer, credit, market and liquidity risk
- Want to diversify part of an existing portfolio
What we assess
When considering a bond, the headline rate is only one part of the decision. We also look at:
- The identity and financial strength of the issuer
- The bond's term and maturity date
- The interest rate and payment schedule
- Whether the bond is senior, subordinated, secured or unsecured
- Currency exposure
- The ability to sell or exit before maturity
- Product charges and adviser remuneration
- The risk of missed payments or loss of capital
- How the bond fits with your wider portfolio
Our approach
We help you look beyond the advertised coupon and understand the complete proposition. Where a bond is considered suitable and available through an approved arrangement, we explain the role it could play, the main risks and the practical steps involved.
Looking for greater certainty around investment income?
Speak with us before making a commitment. We will help you examine both the potential return and the risks behind it.