Bonds, or fixed income investments, are the most commonly known type of fixed income security with government bonds and corporate bonds being the largest sectors of the market.

Governments and businesses issue bonds to raise funds from investors. They are a debt security under which the issuer owes the holders a debt and is obliged to pay them regular interest and the original sum in full when the bond reaches maturity.

Bonds have lower volatility than stocks, hence they are generally viewed as safer investments than stocks. Especially, government treasuries – bonds issued by national governments - are considered among the safest long- term investments.

Moreover, the relative certainty of a fixed interest payment makes bonds a popular choice for investors. Another advantage is that bondholders enjoy a measure of legal protection; in case a company goes bankrupt they will often receive some money back (called the recovery amount).

Factors that influence the price and performance of bonds include market conditions, interest rates, credit ratings and the age of a bond.

Bonds are an important part of any diversified portfolio and they can add an element of stability to it. At HFM we offer derivatives on bonds issued by the world’s leading economies - from Euro Bunds to UK Gilts and US 10-year TreasuryNotes.