fixedincome

Fixed income refers to a class of investment instruments that provide a predictable stream of payments and the return of principal at maturity. They are primarily debt securities issued by governments, municipalities, and corporations, and they are designed to preserve capital and generate income. The key feature is a fixed cash flow, typically in the form of periodic coupon payments, with principal repaid at the end of the term. Prices move in response to interest rate changes, and yields reflect the trade-off between income, price, and risk.

Common fixed-income instruments include government bonds such as Treasuries, corporate bonds, and municipal bonds; inflation-linked securities such as U.S. TIPS; floating-rate notes; and zero-coupon instruments. Some instruments mix characteristics, such as convertible bonds or mortgage-backed securities.

Investors in fixed income face several risks, including credit risk (the issuer's default), interest rate risk (rising rates lowering price), reinvestment risk, and liquidity risk. Credit ratings assess default risk, and duration measures sensitivity to rate changes. The yield to maturity combines income and expected price change.

Strategies range from passive holding of broad bond indices or funds to active credit selection, as well as laddering and barbell approaches to manage cash flow and risk. Fixed income often serves as a stabilizing ballast in diversified portfolios, offering income, capital preservation, and diversification benefits compared with equities, albeit with its own risks.

Tax and regulatory treatment varies by jurisdiction. Municipal bonds may offer tax-exempt income; corporate and government bonds are typically taxable. Market performance is influenced by central bank policy and inflation expectations.