Predictable income, disciplined risk.
Fixed income sits at the centre of everything we do. Below is a general introduction to the asset class and the framework we apply when assessing an opportunity.
What is fixed income?
Fixed income refers to investments that are structured to pay a defined or predictable return over a set term — typically in exchange for lending capital to a government, corporation, or other borrower. Common examples include government and corporate bonds, term deposits, income securities, and privately arranged credit facilities.
The "fixed" in fixed income refers to the defined interest rate and term of the arrangement — it does not mean that returns or capital are guaranteed. The level of risk varies materially between products, borrowers and structures, which is why credit analysis and due diligence matter.
Why investors allocate to fixed income
Fixed income is generally sought for the role it plays alongside growth assets in a diversified portfolio.
Regular income
Structured to pay income at defined intervals over a known term, supporting cash flow planning.
Defined terms
A known term and rate at the outset can bring clarity that growth assets do not always provide.
Portfolio resilience
Fixed income can help diversify a portfolio and moderate volatility across market cycles.
How we assess an opportunity
Every opportunity we consider passes through the same disciplined process before it is put forward to investors.
- Credit quality
- Independent assessment of the borrower's financial strength, track record and capacity to service the obligation.
- Security structure
- Review of the security, ranking and protections available to investors in the structure.
- Market dynamics
- Consideration of the sector, cycle and conditions the borrower and security are exposed to.
- Borrower strength
- Assessment of management, governance and the borrower's alignment with investors.
Fixed income carries risk
Fixed income is often considered lower-volatility than equities, but it is not risk-free. Understanding these risks is a starting point for any conversation with us.
Credit / default risk
The risk that a borrower is unable to meet interest or principal repayments in full or on time.
Liquidity risk
Some fixed income investments cannot be sold or withdrawn before maturity, or only at a discount.
Interest rate risk
Changes in prevailing interest rates can affect the value and relative attractiveness of a fixed rate investment.