Fixed income instruments are loans made by the lender (investor) to the borrower (issuer) in exchange for regular income payments and the return of capital at maturity. While fixed income instruments vary, they generally have a fixed term and a schedule of interest payments which differs to equities where dividends are discretionary.
Fixed income can play a valuable role in investment portfolios, with a wide range of yields to suit your risk profile and investment objectives, capital stability and the repayment of principal at maturity (assuming the issuer does not default or become insolvent) being among the key benefits.
There are two types of fixed income securities:
- Listed fixed income securities are traded on the Australian Securities Exchange (ASX) and are accessible by all investors.
- Unlisted fixed income: Investing in the unlisted market has typically only been available to institutional investors with a minimum investment of $500,000 per bond. NAB Access Bond Service allows eligible wholesale clients to access bond parcels from as little as $50,000.