Fixed Income Assets

RECENT NEWS
Forbes  Oct 1  Comment 
Individual investors boosted their fixed-income and cash allocations last month, according to the September AAII Asset Allocation survey.
SeekingAlpha  Sep 30  Comment 
By WisdomTree: By Rick Harper In recent research released by the Federal Reserve Bank of San Francisco and echoed in statements by several Fed regional bank presidents, Fed officials have voiced concerns that the market is underestimating the...
SeekingAlpha  Sep 30  Comment 
By Value Plus Incentives: Traditional Fixed Income Portfolios can no longer provide acceptable IRRs with low price volatility. Family offices and individual private investors need to be asking hard questions when reviewing their...
Financial Times  Sep 26  Comment 
Gross’s move comes as star of bond market seems to have faded
MarketWatch  Sep 26  Comment 
Investors have pulled $68.8 billion from the Pimco Total Return Fund over the past 16 months.
DailyFinance  Sep 23  Comment 
NEW YORK, NY -- (Marketwired) -- 09/23/14 -- Fiduciary Trust Company International, a global investment management firm serving individuals, families, endowments and foundations and an affiliate of Franklin Templeton Investments, today announced...
Mondo Visione  Sep 19  Comment 
The Financial Industry Regulatory Authority (FINRA) announced that its Board of Governors approved a series of proposed rule changes regarding high-speed and algorithmic trading. The proposals follow FINRA's meeting today, where much of the...
Finance Asia  Sep 19  Comment 
The final day of our poll results looks at trends in fixed-income markets during the coming year.
Finance Asia  Sep 18  Comment 
The final day of our poll results looks at trends in fixed-income markets during the coming year.
Finance Asia  Sep 17  Comment 
Our annual fixed-income poll identifies the region's best borrowers, analysts, rating agencies and research houses. Part one of the results covers bank research.




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Fixed Income assets refer to assets that provide their owners with a fixed stream of income. Bonds are the most common example of a fixed income asset. Companies and government entities will issue bonds or IOUs to investors. These bonds typically pay a fixed rate of interest or coupon rate to investors for a fixed period of time, thus the name fixed income. At the end of the period, the investor receives his principal (the orginal amount of money paid for the bond).

Ratings and Risk

Fixed income assets typically receive ratings from major ratings agencies. These ratings signify the amount of risk represented by the assets. For instance a U.S. treasury bond which is considered to be one of the safest investments, carries a AAA rating, some states likewise carry high ratings. The higher the rating of the bond issuer, the lower the rate of interest required by the purchasers. A smaller, less established company, for instance, might only have a rating of BBB, and would have to pay bond investors significantly higher annual interest rates. Bonds with exceptionally low ratings are known as junk bonds and typically pay the highest interest rates--sometimes in the double digits.

Equities vs. Bonds

Equities and bonds are the two major asset classes available to investors. While there are others (real estate, private equity, and venture capital) these two classes are very common and extremely liquid (can be converted to cash easily). Equities are typically considered to be the riskier of the two asset types (with the exception junk bonds and other lowly rate bonds) and have traditionally generated higher returns than fixed income assets.

Returns

Fixed income assets historically have had a much lower rate of return than stocks (equities). This is because with


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