Bonds Part Two
In today’s video update I discuss the type of fixed income assets that we purchase. We contrast individual bonds with diversified assets and give more clarity on the fixed income assets that we are purchasing in portfolios.
We will provide another update this coming Friday talking about the major issues facing the economy and markets today. Given recent headlines, we thought you might appreciate our thoughts on these issues and how we assess this information as we invest.
A fixed-income security is an investment that provides a return in the form of fixed periodic interest payments and the eventual return of principal at maturity. Unlike variable-income securities, where payments change based on some underlying measure—such as short-term interest rates—the payments of a fixed-income security are known in advance.
Bond laddering is an investment strategy that involves buying bonds with different maturity dates so that the investor can respond relatively quickly to changes in interest rates.
A hedge is an investment that is made with the intention of reducing the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting or opposite position in a related security.