| Fixed Deposit Alternative | Sovereign (Government) or Quasi-Sovereign | Typically issued by governments or government-related entities from developed countries, these bonds tend to have higher (investment-grade) credit ratings and lower risk of default. | Low default rate, highest chance of receiving interest and principal at maturity. Can be seen as a defensive asset class; performance tends to have a low correlation with equity markets. |
| Stable Income Seeker | Corporate | Issued by corporations as a means of financing investment projects or business developments. Issuers in this category tend to be larger companies and are the recipient of investment-grade credit ratings or generally perceived by investors to be credit-worthy entities. | Generally higher returns than bonds issued by reputable government or quasi-sovereign entities; bond performance can be influenced by individual corporate business developments and industry growth trends. Nevertheless, these bonds can also display low correlation with equity market performance, making them useful for portfolio diversification. |
| High Yield Seeker | High-Yield Corporate, but can also be Sovereign (Government) or Quasi-Sovereign bonds | Typically issued by corporations which are perceived as less creditworthy than their larger or better-financed peers; consequently, these bonds also tend to have the highest yields. If rated, such issuers are often given a “non-investment grade” credit rating. Bonds in this category may also include government or quasi-sovereign bonds from countries deemed as less creditworthy by investors. | Offer some of the highest returns in the bond universe; returns can even be “equity-like”. Bonds here tend to be the most volatile and sport the highest levels of credit risk, and are usually the most correlated with equity market performance. |