Fixed Income

Fixed income refers primarily to debt investments under which a government, company, or other borrower promises interest and repayment of principal under stated terms. Government and corporate bonds are the most familiar examples, but the category can also include short-term bills, securitised debt, and loans. Payments may be fixed, floating, inflation-linked, or contingent on the issuer remaining able to pay.

The name does not mean value or income is guaranteed. Bond prices change with interest rates, credit quality, liquidity, currency, and market conditions. A borrower can default, and a bond sold before maturity may realise more or less than its purchase price.

Why it matters for family offices

Fixed income often provides a defensive allocation, scheduled cash flows, and a source of liquidity alongside growth and private assets. A family office can match maturities to expected tax payments, distributions, spending, or capital calls. This is sometimes called liability matching, because assets are selected with known future cash needs in mind.

Risk still needs to be viewed across the family. A portfolio of bonds from one country or sector may be concentrated, and a longer duration portfolio is generally more sensitive to changes in interest rates. Credit exposure can also overlap with the family's operating business or private credit investments. The office examines issuer, maturity, currency, credit quality, liquidity, and any embedded options.

How it shows up in practice

Suppose a family expects $4 million of tax and trust payments over the next 18 months, as well as uncertain private fund calls. Rather than leaving the full amount in one cash account, the investment team builds a ladder of high-quality short-dated bonds and bills whose maturities broadly align with the scheduled obligations. A separate cash reserve covers timing uncertainty.

When market interest rates rise, the quoted value of some bonds falls, but the office does not interpret every decline as a credit problem. It reviews whether the securities can still be held to expected maturity and whether the issuers remain sound. Reporting separates income, market-value movement, maturity dates, and available liquidity, giving the family a practical view of what the fixed income allocation is meant to fund.