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Fixed-Interest Stocks

Fixed-interest stocks are investments that can provide a regular income stream
for your portfolio at known points in time.

WHAT DOES ‘FIXED-INTEREST’ MEAN?

Fixed-interest stocks pay a fixed rate of interest or dividend on a periodic basis, including:

  • Monthly
  • Quarterly
  • Semi-annually
  • Annually
The interest is determined by the coupon (the gross interest rate of the nominal value, expressed as a percentage e.g. the holder of a 5% Treasury 2028 gilt is entitled to £5 interest annually for every £100 nominal held).
 

WHAT ARE THE DIFFERENT TYPES OF FIXED-INTEREST INVESTMENTS?

  • Government Bonds (Gilts)
  • Corporate Bonds
  • Eurobonds
  • Preference Shares
  • Permanent Interest-Bearing Shares (PIBS)


WHAT FIXED-INTEREST INVESTMENTS CAN I HOLD WITHIN MY ISA?

All of the above types are eligible investments for a Stocks and Shares ISA. However, it is worth noting that the level of associated risk can vary across these. Government gilts are widely considered 'low-risk' investments, whereas corporate bonds with lower credit ratings are classified as “high-yield” or “junk bonds”, these are deemed as “higher-risk”.
 

Risk Warning:

Some fixed interest products are classed as Complex Instruments and may require additional appropriateness testing before they can be purchased. For more information, please contact your usual Redmayne Bentley office or executive.

Please remember that the payment of income and the return of capital from any fixed-interest security is not guaranteed in the event the issuer faces insolvency.
Most bonds are tradable on an exchange as shares are, so your investment can rise and fall in value.

Decisions to invest in bonds should be based on available information provided by the issuer in associated documentation.

Please note that Permanent Interest-Bearing Shares (PIBS) are not protected by the Financial Services Compensation Scheme (FSCS).
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