Helping you meet your financial goals
Fixed income (otherwise known as fixed interest) investing can be a valuable tool for diversifying your existing portfolio or to bring your investments more in line with your changing financial goals. For example, if you want a steady income in your retirement.
Our experienced Investment Managers have been running fixed income portfolios for many years with our tried and tested investment philosophy. Armed with the knowledge and experience of our specialist fixed income investing team, you can maximise your portfolio’s potential.
How can I invest in fixed income?
Fixed income investments are an important part of any investment strategy. Depending on your situation and financial goals, our Investment Managers will consider the best approach for you.
Gilt Portfolio Service
If you would like a better rate of return than a traditional UK bank or building society, our Gilt Portfolio Service offers tax-efficient fixed interest investing through a fully tailored discretionary portfolio of UK short-dated gilts (also known as UK government bonds).
Fixed Interest Portfolio Service
Our Fixed Interest Portfolio Service invests in a broadly balanced range of fixed interest funds. By blending these funds, it aims to achieve a net return of 5% per annum, which will help protect you against inflation over the medium term (five years or more).
Fixed income portfolio management
Your personal Investment Manager can build a tailored fixed interest portfolio that’s suited to your needs and feelings about risk, as well as your preference for investing in sterling, US dollars or euros.
Diversified investment portfolio
Your personal Investment Manager can include fixed income investments as part of a diversified investment portfolio, alongside other asset classes like equities and alternatives to help reduce the volatility of returns and, in turn, the risk.
Common questions on fixed income investing
Fixed income or fixed interest investing usually involves investing in bonds - financial products issued by governments or corporations as a way for them to borrow money, like a loan. When you invest, you are ‘loaning’ them money and in return they promise to regularly pay you interest. Bonds are designed to be a lower-risk way to generate a set amount of annual income.
There are various ways to generate a fixed income from your investment portfolio. As we have deep expertise and experience in fixed income investing, we can use different approaches depending on what’s best for you. For example:
- Bond ladders: Think of this as a series of bonds that pay out over time. For example, some might mature every two years, so when one pays back, we reinvest for future income
- Cash flow modelling: A portfolio of bonds that are aligned with your monthly expenses. This allows you to better manage your income and spending
- Discount investing/grossing up return: We look for discounted bonds where much of the return is a tax-free capital gain, which can be more efficient than regular interest income.
Fixed income investing can be a good choice for people who are looking for stability, a regular income, or for something less risky than equities. Fixed income investing in retirement is a popular choice, for example – allowing retirees to either supplement their pension or protect their wealth from potential market volatility.
It can also help people who want to diversify their portfolio and balance out more aggressive investments.
Now could be a good time to incorporate fixed income investing into your investment strategy, particularly if you’re starting to plan for retirement.
Rising interest rates can also make bonds and fixed income investments more attractive. With careful selection from an experienced Investment Manager, investors could potentially lock in competitive returns while managing risk.
There are five main reasons why a fixed interest portfolio might be attractive to you:
- To reduce volatility and risk by using a diverse range of asset classes (i.e. diversifying)
- To generate a steady income
- To produce tax-efficient capital gains (depending on your circumstances)
- For more potentially reliable returns
- To use the income you receive to cover your regular expenses, like school fees or bills.
Fixed income investments are generally lower risk than equities but not completely risk-free. Government bonds are among the safest, while corporate bonds carry slightly more risk depending on the company's creditworthiness.
The stability of fixed income comes from predictable interest payments, but factors like inflation and rising interest rates can affect their value. We’ll help you find the right kind of fixed income investment for your portfolio and goals.
Examples of fixed income investments include: government bonds (like UK gilts), corporate bonds from companies issuing debt and savings products such as fixed-term deposits. Other options include inflation-linked bonds, which adjust for rising prices and bond funds that spread risk by investing in a mix of different bonds.
Risk warning
Our Fixed Interest Portfolio Service is designed to work over a typical investment cycle of five years or more, so we recommend you stay invested for at least five years.
