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Finding the right fixed income approach

 

Fixed income investments can play an important role in a wide range of investment strategies. Fixed income investments may help to diversify holdings thus offset the volatility of the stock market and may help with capital preservation.

 

Diversifying across asset classes is an important way you can help mitigate risk in your portfolio. While the exact allocation to fixed income depends on your specific goals, situation, liquidity needs, risk tolerance and time horizon, fixed income investments can be a complement to your equity holdings.

 

You can draw from a wide range of fixed income investments

Many investors assume that investing in fixed income means buying bonds. However, fixed income investing offers a much wider range of investment choices, from individual securities, to pooled investments, to professionally managed programs. Clients at Merrill have access to a wide range of fixed income investments and other alternative solutions that may provide income, including:

Individual taxable and municipal securities Mutual funds Closed-end funds Exchange traded funds
Unit investment trusts Derivative strategies Market-linked Investments* Professional portfolio programs managed by established managers
Individual taxable and municipal securities
Mutual funds
Closed-end funds
Exchange traded funds
Unit investment trusts
Derivative strategies
Market-linked Investments
Professional portfolio programs managed by established managers

Merrill’s offering allows investors the opportunity to create a diversified fixed income allocation in their portfolio. Diversification can help you customize your holdings to your specific goals, as well as potentially improving long-term, risk-adjusted returns while lowering interim volatility.

 

Access our fixed income knowledge and experience

Every investment solution starts with your goals. Working with a Merrill Lynch Wealth Management Advisor, you can create an approach that is tailored to your specific goals, situation, liquidity needs, risk tolerance and time horizon. During this process, your advisor can draw on the knowledge and experience of our fixed income specialists who can offer insights in the form of asset allocation models, market analysis and help find opportunities in today’s markets. You will also have access to proprietary research reports. These services can help you make smarter investing decisions and help you achieve your investment goals

 

Whether you have complex needs that may require a tailor-made fixed income solution, or you just want access to a wide range of fixed income products, working with a Merrill Lynch Wealth Management Advisor can help you access the investments and expertise you need to pursue your goals.

 

3 Questions to Ask Your Merrill advisor

  1. How can fixed income investments help support my financial goals?
  2. Do I have the right mix of fixed income investments in my portfolio today?
  3. What approach can help me make the most of my fixed income investments?

*Market-Linked investments are for eligible investors only.

 

Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.

 

Investing in fixed-income securities may involve certain risks, including the credit quality of individual issuers, possible prepayments, market or economic developments and yields and share price fluctuations due to changes in interest rates. When interest rates go up, bond prices typically drop, and vice versa.

 

Market-Linked Investments may not be in the best interest of all investors. Market-Linked Investments typically do not pay periodic income, and returns (if any) on the investments are paid at maturity, subject to the credit risk of the issuer. Unlike traditional fixed-income securities, Market-Linked Investments are generally not principal protected. As an investor in Market-Linked Investments, you may lose all or portion of your investment.

 

There may be less information available on the financial condition of issuers of municipal securities than for public corporations.

 

Income from investing in municipal bond is generally exempt from federal and state taxes for residents of issuing state. While the interest income is tax-exempt, any capital gains distributed are taxable to the investor. Income for some investors may be subject to the Federal Alternative Minimum Tax (AMT).

 

Single-State municipal bonds pose additional risk due to limited geographical diversification.

 

Investments in non-investment-grade debt securities (“high-yield” or “junk”) may be subject to greater market fluctuations and risk of default or loss of income and principal than securities in higher rating categories of default or loss of income and principal than securities in higher rating categories.

 

The use of derivative instruments involves risk different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. Derivatives are subject to a number of risks such as liquidity risk, interest rate risk, market risk, credit risk and management risk. An investment in a derivative instrument could lose more than the principal amount invested.

 

Mutual Funds, new issue ETFs and CEFs, and UITs are offered pursuant to a prospectus, which contains the investment objectives, risks, charges and expenses and other important information about the UIT or fund. Investors should read the prospectus and carefully consider this information before investing. Please contact your Merrill Lynch Wealth Management Advisor for a prospectus.

 

Risk management and diversification processes seek to mitigate, but cannot eliminate risk, nor do they imply low risk.

 

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