Fixed Income Assets

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FX Street  Apr 4  Comment 
Daily Forecast - 04 April 2014 Short Sterling Sept 14 Support at 9936/35, 9932/31, 9927, 9924/23,... For more information, read our latest forex news and reports.
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Daily Forecast - 03 April 2014 Euribor June 14 resistance at 9969, 9972/73, 9976(March Highs),... For more information, read our latest forex news and reports.
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Analysts’ Views: HU Macro: According to the Economic Ministry, the ESA budget gap was 2.2% last... For more information, read our latest forex news and reports.
FX Street  Apr 1  Comment 
Daily Forecast - 01 April 2014 Short Sterling Sept 14 Support at 9936/35, 9932/31, 9927, 9924/23,... For more information, read our latest forex news and reports.
DailyFinance  Mar 31  Comment 
Prudential Fixed Income has hired a new senior portfolio manager for its investment grade corporate bond team and added an economist with expertise in Latin America to its global macroeconomic research team, the company...
FX Street  Mar 28  Comment 
Analysts’ Views: HU Rating: S&P raised the outlook for the sovereign‘s credit rating to stable... For more information, read our latest forex news and reports.
FX Street  Mar 28  Comment 
Daily Forecast - 28 March 2014 Bobl June contract Bobl held support at 125.47/45 but failed 4 ticks... For more information, read our latest forex news and reports.
FX Street  Mar 24  Comment 
Chart of the Day: EURHUF and HGB Yield Curve: A weaker HUF may force an end to rate cuts and lead... For more information, read our latest forex news and reports.
Forbes  Mar 22  Comment 
Liquidnet, the leading independent dark pool for equities, is going to expand into fixed income.




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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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