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Fixed Maturity Bond Funds

Looking for yield pickup?

Pathways to Yield

Tough times for income investors
A prolonged period of record low or even negative yields has left investors with the risk of eroding wealth over time. In the search for yield, investors have to move higher up the risk spectrum, accepting more risk and uncertainty along the way.

With market conditions remaining difficult and unlikely to change, what can clients do to source income?

Investment solutions for the current climate
Funds with a short and predefined maturity can help investors to achieve the envisaged gross yield and limit interest rate and spread risk.

Fixed maturity bond funds offer investors a yield pickup by investing in a globally diversified portfolio of bonds with a maximum maturity close to the fund’s own expiration date. When the fund matures, investors are repaid their share of its net asset value.

A key advantage of this type of fund is the fact that it provides investors with a payout structure that is comparable to a single bond investment, but with greatly reduced single issuer risk, given the well-diversified portfolios.

Strategy could appeal to investors looking for:

  • Return of capital at maturity
  • Regular income stream
  • Broad diversification
  • Decreasing interest rate and spread risk over time
  • Professional management
  • Liquidity

Read about the latest addition to the fixed maturity bond fund family – Credit Suisse (Lux) Fixed Maturity Bond Fund 2022 S-III

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