Bonds, also known as fixed income securities, are a fundamental part of diversified Optimum discretionary model portfolios. In our strategies at Cantor Fitzgerald Ireland, bonds play a crucial role in delivering predictable income and capital preservation, especially during periods of market volatility.

Irish government bonds, for example, are very secure investments backed by the Central Bank. They are widely utilised not only by pension funds and institutional investors but also within our own managed portfolios. But what exactly are bonds, and why are they so integral to discretionary investment planning?

How Bonds Work

Bonds are debt instruments issued by governments, semi-state bodies, or corporations to raise funding. When a discretionary portfolio allocates capital to bonds, it is effectively lending money to these issuers. Typically, the portfolio receives regular interest payments, known as coupons, and, at the end of the bond’s term (maturity), a return of the original capital invested is also received if purchased below the PAR price.

For example, a portfolio might include a €10,000 allocation to an Irish government bond with a 10-year term and a 2% annual coupon. This would deliver €200 annually in gross income, along with the potential to generate a capital return on the amount originally invested, depending on the purchase price.

This simplicity makes bonds a reliable tool for investment managers looking to generate income and preserve capital as part of a broader strategy to meet clients’ individual needs.

Types of Bonds in Portfolio Construction

Bonds vary by issuer and purpose. Within our Optimum discretionary portfolios, we may incorporate different types of bonds either directly or via ETFs and funds. Here’s some of the key ones:

• Sovereign Bonds: Issued by governments or state bodies such as the National Treasury Management Agency (NTMA) in Ireland. Depending on the country of issuance, these typically are the cornerstone of low-risk fixed income allocation. Cantor Fitzgerald has deep expertise in the bond market as a primary dealer to both the  Irish and US Governments, for instance.
• Corporate Bonds: Issued by companies, these typically carry more credit risk but offer higher coupons.
• Green Bonds: Governments, state bodies and corporates may issue green bonds to finance environmentally sustainable projects. These are increasingly featured in modern portfolios aligned with ESG principles.

Why Bonds Matter as part of your long-term investment strategy

Bonds can offer a steady and transparent payment profile, making them ideal for managing income expectations and smoothing investment returns over time. Over the very long term, they have served to provide a cushion against equity volatility,  reducing portfolio drawdowns and enhancing risk-adjusted returns.

This consistency is especially important in portfolios designed for income generation and capital preservation.

An Essential Portfolio Component

For discretionary portfolios, bonds are not just a conservative add-on. They are a strategic core. Whether the objective is income, diversification, tax efficiency, or capital stability, fixed income can play a purposeful role.

At Cantor Fitzgerald Ireland, our investment managers integrate bonds thoughtfully across portfolios alongside equities, balancing return expectations with market risks. These professionally managed portfolios allow experts to make day-to-day decisions, balancing risk and opportunity across a range of asset classes, including a strategic mix of equities and bonds.

Our Discretionary Investment Service is designed to simplify the investment process, offering expert, hands-on portfolio management tailored to your personal goals, risk tolerance, and sustainability preferences.

With a dedicated relationship manager and the support of an experienced investment team, we take responsibility for managing your portfolio while keeping you informed through regular updates and ongoing personal engagement. This allows you to focus on what matters most.

Get in touch to find out how our Optimum discretionary strategies can help you build enduring wealth.

Written by James Stafford, Business Development Associate, Cantor Fitzgerald Ireland

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