Example Product Portfolio Gap Analysis Template - Free Download | Page 12
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Example Product Portfolio Gap Analysis Template
Portfolio Gap Analysis
Fixed Income Risk Analysis
Potential Gap
Fixed Income Risk
continued
Shorter Maturities Maturity
In essence, investing in bonds is simply lending a company
your money for a specific period in return for them
making periodic interest payments to you, and then
returning your principal at some predetermined “maturity
date”. For longer maturity dates, investors demand a
higher coupon rate because of the increased chance that
the company could go bankrupt before it can pay back the
principal. Longer maturity securities tend to have increased
annual return expectations, however the additional return
comes at the steep price of much higher volatility.
0% 25% 50% 75% 100%
1-3 Years
3-5 Years
5-7 Years
7-10 Years
10-15 Years
15-20 Years
20-30 Years
30+ Years
Current
Recommended
Higher Quality Quality
Historical evidence shows us that investors have not been
adequately compensated for extending the credit quality of
their fixed income below investment grade (BBB). While
low quality bonds have a higher average yield, during
extreme periods of inflation their risk of default and loss of
principal is significantly higher than investment grade
companies.
0% 25% 50% 75% 100%
AAA
AA
A
BBB
BB
B
B<
NR
Current
Recommended
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