march 2009 B.I.G

An Alternative to Investment Dilemma?
Navneet Kampani discusses the dynamics of fixed income strategy and tells us the nuances of investment.
risk tolerance. Fixed income mutual funds and individual bonds fill specific needs in a portfolio or an asset allocation strategy. Fixed income investments can be an important part of a balanced portfolio, providing diversification benefits for investors. Fixed Income investment is commonly available in following categories: 1. Individual Bonds – Sovereign or corporate 2. Fixed Income mutual Funds. Whether to invest in fixed income markets through individual bonds or mutual funds one must consider the following factors: 1. Do you have time and acumen to do research and monitor your fixed income investment? at times, researching individual fixed income securities can be more difficult than researching stocks. Some investments, such as Treasury bonds, government backed enterprises etc, are fairly easy to research. however, other investments, such as corporate bonds, are more difficult to research and sometimes there is limited information on a specific issue or issuer. many bonds do not trade on an exchange, so it may be difficult to monitor what other investors are paying or receiving for similar bonds. 2. Are you seeking regular income? If you are seeking monthly income, bond funds can provide that income stream. The income stream may vary according to any changes in the underlying bonds and their coupon payments. If you don’t need the income each month, you can choose to reinvest your dividends. most individual bonds pay a steady stream of income, through semi-annual payments. Some issuers now offer bonds that pay interest monthly or quarterly. The amount you receive depends on the face value of the bond and its coupon
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Fixed Income Strategy

ith uncertain economies, changing market conditions, depressed equity markets, low interest rate regime, where do we keep our money? This was a question posed to me during one of the social gatherings. Before I could even put my thoughts together to answer the question some one shot with a reply – Fixed Income. I refrained from making any comments but the gentlemen went ahead giving an explanation as to why he thinks that is the correct strategy during the current times. Taking cue from what the gentle explained, I thought it would be a good opportunity for me to put forward some of the facts about Fixed Income and how it can help us in our objective. Fixed income can be an important part of everyone’s asset allocation strategy, providing diversification. as I had mentioned couple of months ago in my article that in order to build a solid investment strategy, investor must first create an asset allocation plan that is based on his/her objectives, goals, and