Bond

A bond is a fixed-income security. With a bond, an investor lends money to a government or company (the issuer or debtor) for a specific term. In return, the investor receives regular interest payments (coupons) and, at the end of the term, repayment of the invested capital. Investors in bonds are creditors, but not co-owners, which is why they have no voting rights, but rather a contractual claim to interest and repayment.

Compared to stocks, bonds are considered a more stable asset class. Adding bonds to a portfolio generally reduces the risk, i.e., the value fluctuations, of the overall strategy. However, they also tend to offer lower expected returns.

There is an inverse relationship between interest rates and the price of a traded bond: if interest rates rise, older bonds that have already been placed become less attractive and their prices fall. This also increases their yield to maturity. True Wealth's bond price calculator can be used to calculate this basic mechanism.

True Wealth's investment universe offers a wide range of exchange-traded bonds from the most important economic regions, including high-yield, inflation-protected, and CHF-hedged bonds.

True Wealth CEO Felix Niederer discusses this topic in more detail in the video podcast on bonds.

The second most important asset class: bonds