General Information

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 are having to move higher up the risk spectrum, accepting more risk and uncertainty along the way.

With market conditions unlikely to change and remain difficult, 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 final maturity, at which point the fund will mature and investors repaid their share of its net asset value.

A key adavantage of these type of funds is the fact that they provide 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

Secondary Content