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Fixed Income Exchange Traded Fund – Benefits and Risks that You Must Know
By Dr Wealth  •  October 29, 2013

There are several ways to invest in fixed income market. One of them is investing in Fixed Income ETF. Below are the advantages and the risk of investing in Fixed Income ETF:

Diversification

The underlying asset for fixed income ETF comprises dozens if not thousands of bonds. This will help to diversify your risk of investing in one or few bonds. The diversification benefit for fixed income ETF is not only diversification across different industries or countries, but it also diversify into different credit rating of bonds. This mix credit rating of bonds will help to reduce the concentration risk, which is the risk of investing in one or few bonds and the bonds failed to pay its obligations.

Liquidity

Although individual bonds are traded on the SGX, the trading volumes for most of the bonds are very low. This will reduce your liquidity of trading the bonds. On the ...

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By Dr Wealth
Dr Wealth provides trusted financial education to individuals. We teach researched and actionable investment methods so that our graduates are successful in their investment journey and achieve market-beating returns.
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