Looking for a fixed return on your investments?

If you want to generate a set amount of stable, predictable annual income, the answer could be fixed income, also referred to as fixed interest investments.

However, in today’s difficult conditions after the recent price declines, they are now far more appealing to a wide range of investors. They are also generally considered lower risk than equities because they rank higher on a company’s balance sheet.

Fixed income investments are mainly corporate bonds (issued by a company that wants to raise money) or gilts (government bonds). They pay a set amount of income to you, known as the ‘coupon’, until redemption at the end of the bond’s term.

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Choose the experts in fixed income investing

At Canaccord Genuity Wealth Management, we have many years of experience in investing directly in bonds, which we think gives our clients a great opportunity to gain specific exposure to attractive investments.

Your Personal Wealth Manager will use their expertise and experience to:

1. Create a tailored solution for you, looking for opportunities that are exactly suited to your needs and feelings about risk
2. Construct a fixed income portfolio of various different bonds and/or maturities
3. Give you access to bonds via a corporate bond fund or our Fixed Interest Portfolio Service.

How we keep your investment safe

Bonds can be a good entry into investing, due to their lower investment risk profile and certainty of income. While corporate bonds tend to be lower risk than equities, gilts tend to be a safer investment than corporate bonds.

We are seeing the current yield for UK investment-grade corporates at around 5.5% per annum, but a carefully constructed fixed income portfolio, including higher yielding sub-investment grade corporate bonds, could achieve a yield to redemption on average c.7% for bonds with terms of 5-10 years.

Why choose our fixed interest portfolio service?

• We build a personal relationship with you so we fully understand your aims for the future
• We shape a bespoke fixed income portfolio around your investment goals and risk appetite
• We make your life easier by taking charge of the day-to-day decisions
• We always keep you informed
• You can check how we’re doing 24/7 with our CG Wealth Online service.

Dedicated to helping you generate the income you want

We dedicate all our energy and resources to the complex area of investing, so you can rely on our expertise and capabilities. Your dedicated personal wealth manager has everything they need to manage your portfolio at their fingertips:

• Teams of specialists in equities, funds, fixed interest and alternatives
• 70 in-house researchers and analysts across all asset classes

Let us do the hard work for you

Navigating the investment landscape can be tricky at the best of times and is even harder now. Our investment experts have the time, experience, and tools to actively manage your portfolio in your best interests, leaving you free to get on with life safe in the knowledge your investments are well looked after and working hard to achieve your financial objectives.

Why is it a good time to add bonds to your investment portfolio?

Bond strategies are more attractive than they have been for many years. The recent rise in interest rates has caused the price of bonds to fall to such an extent they are now at an attractive level for investors. In some cases, their market price is well below their face value (or ‘par’ value).

So, as well as the income from the bond interest or coupon, you will make a capital gain (or profit) where the issuer redeems the bond at par at the end of its term. Some bonds are yielding over 5.5% per annum at the moment, making them a real alternative to other asset classes.

At Canaccord Genuity Wealth Management (CGWM) we believe that, at some point in the future, the Bank of England will start reducing interest rates again. This creates the potential to lead to higher bond prices and the opportunity to sell your bond/s at a profit.

It can also be a tax-efficient way of investing, provided you choose gilts (or some qualifying sterling corporate bonds), as any capital growth is free of capital gains tax for UK individual investors.

An example of how a bond investment works

You might buy an existing five-year £1,000 bond, issued in 2019, for £900. You then receive the interest (also known as the ‘coupon’) payments from that bond, providing your regular income.

When the bond matures in 2024, the issuer will repay the full £1,000 par value, so you will also gain a profit of £100. This offers a significant uplift to the overall yield on your initial investment, which is especially noticeable when you invest in short-dated bonds, i.e. with up to three years until redemption.

Bonds can be issued for terms of typically up to 30 years, so you need to decide how long you can leave your money invested before receiving your profit at the end of the term.  Bonds can also be sold at their market price at any time before the redemption date.