The importance of fixed income in portfolios

Capital at risk. All financial investments involve an element of risk. Therefore, the value of your investment and the income from it will vary and your initial investment amount cannot be guaranteed.

The role of fixed income in portfolios

Hear from BlackRock experts as they provide their own perspectives and valuable insights on:
● The importance of fixed income in a portfolio
● Role of fixed income in portfolio construction

  • What are the potential benefits of
    fixed income?

    Fixed income investments can potentially benefit investors in different ways, depending on their financial goals.

    If you are seeking to grow your assets over time to save for retirement or other long-term goals, you probably hold a significant amount of equity in your portfolio. Allocating a portion of your portfolio to fixed income investments can potentially help offset losses when stock markets are erratic.

    If you are seeking to generate income, fixed income investments are likely a critical part of your portfolio. Fixed income investors receive a fixed amount of income at a pre-determined cadence in the form of coupon payments on bond holdings. Fixed income asset classes provide different levels of yield and entail different types and amounts of risks.

    What are the risks associated with
    fixed income?

    Bonds are broadly known to carry lower risk than stocks. Fixed income assets generally are less sensitive to most macro threats such as economic downturns and geopolitical events. But there are risks associated with fixed income investments.

    Interest rate risk garners the most attention among investors because when interest rates rise, bond prices fall. Interest rate movements are the major cause of price volatility in bond markets.

    Inflation is another source of risk for bond investors. If the rate of inflation outpaces the fixed amount of income a bond provides, the investor loses purchasing power.

    Credit risk (also known as business risk or financial risk) refers to the possibility of an issuer defaulting on its debt obligation.

    Liquidity risk is the risk that an investor wishing to sell a fixed income asset is unable to find a buyer.

Why index your bonds?

Choice
Choice
Diversification
Diversification
Value
Value
Transparency
Transparency

Why iShares for indexed fixed income solutions?

BlackRock is a leading provider of indexed fixed income solutions. Hear from Brett Pybus, CFA, Head of EMEA Investment and Product Strategy, as he outlines what distinguishes BlackRock from other ETF providers.

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