Fixed Income

Fixed income is an investing approach focused on preservation of capital and income. If Shareholders are seeking a steady and reliable stream of income with lower risk than stocks, shareholders may want to consider fixed income. DIGITIAN CAPITAL, in order to provide steady source of  current  income to our the clients,   provides research based advise to invest a part of the investible Fund  in multi class assets including Fixed Income Instruments

Multi-Assets Approach:

Advantages of  Fixed Income

 

  1. Higher Income and enhanced Diversification
  2. Balancing Diversified Sources of Returns
  3. Seeking Attractive Risk-Adjusted Returns

 

Principal Investment Strategies

Invest primarily in a global portfolio of fixed income securities and derivatives

  • of any maturity of issuers located in emerging markets
  • denominated in any currency (on a hedged or un-hedged basis).

Fixed income securities are debt obligations such as :

  • bonds and debentures Government securities,
  • debt obligations of domestic and corporations,
  • debt obligations of non-U.S. governments and their political subdivisions,
  • asset-backed securities, various mortgage-backed securities (both residential and commercial),
  • other floating or variable rate obligations,
  • municipal obligations and zero coupon debt securities.
  • Emerging markets include, but are not limited to, countries that are included in the J.P. Morgan GBI-EM Global Diversified Index. T

 

  • Out of the Portfolio dedicated for Fixed Income –  allocation of  at least 90% of assets in fixed income securities issued by governments, their political subdivisions (states, provinces and municipalities), agencies and companies tied economically to an emerging market.
  •  The full spectrum of available investments, including non-investment grade (high yield or junk) securities (including distressed securities) or securities determined by Fund management to be of similar credit quality, securities of small cap issuers and derivatives may be utilized in satisfying the Fund’s 80% policy.
  • It is possible to invest  in non-investment grade (high yield or junk) securities or securities determined on the basis of research  to be of similar credit quality. Many of the countries will have sovereign ratings that are below investment grade or will be unrated. High yield bonds are debt securities which are rated lower than investment grade (below the fourth highest rating category of the major rating agencies). These securities generally pay more interest than higher rated securities. The higher yield is an incentive to investors who otherwise may be hesitant to purchase the debt of such a low rated issuer.
  • Exposure to currencies by investing in bonds of emerging market issuers denominated in any currency..
  • Exposure to currencies through the use of cash and derivatives

Maturity  Investments in Bonds are in different maturity buckets  from 0-1 years, 1-2 years to 20+ years

 

Credit Quality – Investments in Bonds will be of different  Credit Quality with  atleast 10% in   (A, AA grades) , 85% in (BBB, BB, B)  and 5% Junk (CCC, CC, C and D grade)

Debt Securities Risk — Debt securities, such as bonds, involve interest rate risk, credit risk, extension risk, and prepayment risk, among other things

Interest Rate Risk — The market value of bonds and other fixed-income securities changes in response to interest rate changes and other factors. Interest rate risk is the risk that prices of bonds and other fixed-income securities will increase as interest rates fall and decrease as interest rates rise. For example, if interest rates increase by 1%, assuming a current portfolio duration of ten years, and all other factors being equal, the value of the  investments would be expected to decrease by 10%.

 

Credit Risk — Credit risk refers to the possibility that the issuer of a debt security (i.e., the borrower) will not be able to make principal and interest payments when due. Changes in an issuer’s credit rating or the market’s perception of an issuer’s creditworthiness may also affect the value of the investment . The degree of credit risk depends on the issuer’s financial condition and on the terms of the securities.

Extension Risk — When interest rates rise, certain obligations will be paid off by the obligor more slowly than anticipated, causing the value of these obligations to fall.

Prepayment Risk — When interest rates fall, certain obligations will be paid off by the obligor more quickly than originally anticipated, and the Fund may have to invest the proceeds in securities with lower yields.