When you invest in a bond, you lend money to a government, public-sector undertaking or company for a specified period, in return for interest. But not all bonds are alike: they differ in terms of issuer, tenure, credit quality, risk and potential yield. Credit ratings such as AAA, AA, A and BBB help indicate an issuer’s relative ability to meet its repayment obligations, although they do not eliminate investment risk.
This is why bond investing need not mean choosing just one bond. Investors can build a mix across different issuers, maturities and credit ratings based on their risk appetite and financial goals. Read the infographic to understand how such a diversified bond portfolio may be structured, and how its different components can contribute varying levels of relative safety, risk and potential yield.
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