^{Building Wealth} Unlocking fixed-income potential

Rethinking access to fixed-income markets

In a financial world increasingly shaped by innovation and inclusivity, the notion that premium investment opportunities are reserved for the ultra-wealthy is rapidly fading. The fixed-income market, once a fortress of institutional capital and high-net-worth exclusivity, is undergoing a quiet revolution. At the heart of this shift lies a deceptively simple concept: fractional bonds.

Imagine accessing the same income generating potential of a USD 200,000 bond with just USD 25,000, with a significantly lower capital outlay. It is a strategic evolution designed to empower affluent investors with greater flexibility, diversification and control.

Understanding Fractional Bonds

Fractional bonds are investment products that mirror the economic performance of a reference bond. Investors do not own the underlying bond but receive a proportional share of its cash flows, including returns and principal repayments. Moreover, Fractional bond investments do not grant direct ownership of the underlying bond. As a result, investors do not receive voting rights, nor do they participate in corporate actions or bondholder meetings. This limitation is important to understand, as it distinguishes fractional products from traditional bond investments and may affect investor rights and protections.

For example:

If a reference bond pays USD 5,000 in semi-annual coupons and USD 200,000 at maturity, a fractional bond investor with USD 25,000 would receive 12.5% of those cash flows, USD 625 in coupons semi-annually and USD 25,000 at maturity.

Disclaimer: The data used on this page is for illustrative purposes only.

Explore common questions about Fractional Bonds here.

Key features and benefits

Risks and considerations

While fractional bonds offer numerous advantages, investors should be aware of certain:

• No ownership rights
  Fractional Bonds do not provide direct ownership, voting rights, or participation in corporate actions or bondholder meetings. These investments are not principal-protected and carry risks including liquidity, market, credit, interest rate, and limited rights.
• Limited liquidity
  Liquidity in fractional bonds may be more limited than in traditional bonds, depending on the platform and prevailing market conditions.
• Other risks
  Interest rate, market, and currency risks may affect the value of fractional bond investments, particularly when reference bonds are sensitive to rate changes or denominated in foreign currencies.

How Fractional Bonds work

The operational process involves:

1. Selecting a reference bond
   Investors may begin by choosing from a predefined list of eligible bonds, which serve as the underlying instruments for fractional bond investments. This selection helps determine the characteristics and risk profile of the fractional bond.
2. Subscription
   Investors submit documentation and place orders through the platform.
3. Execution
   Orders are consolidated and executed by the trading desk.
4. Settlement and reporting
   Investors receive trade confirmations, portfolio statements, and performance insights via digital dashboards.

Things to consider before investing:

1. How fractional bonds fit in our portfolio
2. Your liquidity needs and investment horizon
3. Your ability and willingness to take risk
4. Whether the selected fractional bond investment aligns with your risk profile

Fractional Bonds: A strategic shift in wealth management

Fractional bonds represent a significant innovation in fixed-income investing. By lowering entry barriers and maintaining economic exposure to high-quality bonds, they empower affluent investors to diversify, generate income, and optimise their portfolios with greater flexibility. As financial markets continue to evolve, fractional bonds are poised to become a staple in modern wealth management strategies.