Skip to main content

Fixed income investing

Why now is an ideal time to consider fixed income investments

When interest rates rise, bond prices fall, as witnessed in 2022, when core bond markets experienced some of the greatest annual falls in modern history. In some cases, gilt and bond prices fell so far that their market price is now well below their face value.

Our investment management experts believe the outlook for fixed income markets has improved, with inflation increases peaking and suggestions that interest rates will not have to rise much further. This environment  could well mean you can make a capital gain or profit from any future fixed income market recovery.

How can I invest in fixed income?

Fixed income investing is an important part of a diversified portfolio. However, depending on where you are in life and what you’re looking to achieve, the approach you take and types of fixed income investments you make are important considerations.

Our Investment Managers can review your situation and advise on the best way forward, whether it’s investing directly into bonds, via funds, exchange traded funds (ETFs) or investment trusts.

Our experts will also see whether it’s suitable for you to have a portfolio made up entirely of fixed income investments. There are various strategies available which can be useful when thinking about income needs in retirement and later life. Our Investment Managers can consider the best approach for you from our range of options below.

Gilt Portfolio Service

Our Gilt Portfolio Service offers tax-efficient fixed interest investing, through a fully tailored discretionary portfolio of UK short-dated gilts, which can help you achieve a better rate of return than from a traditional UK bank or building society. This is a highly flexible service, as we select individual gilts, as many or few as required, with maturity dates that match your short-term goals and plans.

Find out more

Fixed income portfolio

If you prefer a tailored portfolio of fixed income investments, your Investment Manager can choose fixed income investments that are exactly suited to your needs and feelings about risk, as well as your preference for investing in sterling, US dollars or euros.

Fixed Interest Portfolio Service

By investing in a broadly balanced range of fixed interest funds, our Fixed Interest Portfolio Service aims to achieve a net return of 5% per annum that will help to protect you against inflation over the medium term (five years or more).

Read our brochure

Diversified investment portfolio

Fixed income investments can also form part of your diversified investment portfolio, alongside other asset classes such as equities and alternatives. They can help reduce the volatility of returns (and in turn, the risk).

Speak to a fixed income investment expert

If you’d like to find out more about how fixed income investments could help you achieve your financial goals, request a free, no-obligation consultation. Depending on your situation and attitude to investment risk, we’ll devise an investment strategy to work for you and your income requirements.

Get in touch

How our investment specialists manage the risk of investing in bonds

With any investment there is always the risk that you may not get your money back, which is why it’s important to seek expert advice. Our Investment Managers have access to deep and quality research from our Fixed Income Credit Committee, which means we will only look at companies which we believe can service their debt and repay bondholders – companies that can operate successfully in the current economic environment and have healthy balance sheets.

Fixed income – your questions answered

Fixed income or fixed interest – also known as bonds or gilts – are a type of investment that provides a regular, fixed amount of income.

They’re essentially loans or ‘debt’ instruments issued by governments and companies. So, when you invest in a bond, you’re effectively lending the government or company your money for a fixed length of time which can be anything from 30 days to 30 years.

At the end of a bond’s lifetime, you get back the full amount you lent the government or company (your capital) plus a set amount of income each year called a ‘coupon’. During the course of ownership, the value of the bond can fluctuate, for example due to changes in the markets’ views of inflation, and interest rates.

Yes, fixed income investments are considered lower risk than many other forms of investment. This is because, if a company fails, its auditors go through a process of repaying its creditors and repaying bondholders is prioritised over shareholders (equities). This ultimately means there’s less risk of losing your capital.

Fixed income investments can be a useful addition to your portfolio as they help to provide diversification. This is because bonds typically (though not always), have an opposite correlation to equity performance, so during times of volatility they may help to smooth your returns.

They’re often very useful for retired investors as they can provide a regular, steady income.

There are various types of bonds, all with varying risk and return profiles.

With lower quality corporate bonds, known as ‘sub-investment grade’ or ‘high yield’, there’s a higher risk that the company issuing them isn’t creditworthy and that it might default on its bond payments. These bonds tend to be more sensitive to the prevailing economic climate, so could be more attractive if times are prosperous.  

Higher quality bonds, issued by governments and large companies, known as ‘investment grade’ bonds, tend to be more sensitive to interest-rate fluctuations. These will decline in price as interest rates rise, making them better value. This is what we’ve seen in markets recently with interest rate rises causing a sharp drop in bond prices.

Yes, fixed income investing may be a useful tax planning tool although you should speak with a professional tax adviser about your individual circumstances. While bond returns are subject to income tax, both ‘qualifying’ corporate and government bonds (gilts) are free of capital gains tax for UK individual investors.

Investment management

Discretionary investment management built around you and specialist investments including fixed income and ESG portfolio services.

Investment management

Independent wealth planning

A comprehensive review of your finances leading to a highly personalised long-term financial plan.

Wealth planning

IHT Portfolio Service

Designed to maximise short term growth potential while protecting your wealth for the future.

IHT Portfolio Service

Retirement planning

Expert, independent advice on retirement and pension planning to help you realise your goals in later life.

Retirement planning

Speak to the Adam & Company team

Get in touch with our investment experts to arrange a no-obligation consultation to discuss your investment needs with one of the team.

Get in touch

Investment involves risk. The value of investments and the income from them can go down as well as up and you may not get back the amount originally invested. Past performance is not a reliable indicator of future performance.

Our portfolios are designed to work over a typical investment cycle of 7-10 years, so we recommend you stay invested for at least seven years.

The tax treatment of all investments depends upon individual circumstances and the levels and basis of taxation may change in the future. Investors should discuss their financial arrangements with their own tax adviser before investing.

Investment involves risk and you may not get back what you invest. It’s not suitable for everyone.

Investment involves risk and is not suitable for everyone.