The Bond Desk
The Bond Desk Direct Fixed Income service has been created to offer Escala investors traditional fixed income portfolios that are curated, transparent and secure. The service delivers dedicated fixed income expertise with integrity.
The Direct Fixed Income service allows investors to create and manage a fixed income portfolio based on their specific objectives for income, liability management, risk and target return.
All holdings are in the name of the investor and not within a unit trust. This means the holdings, as well as the attribution of performance of their fixed income portfolio are transparent.
In addition, as portfolios are customisable in terms of credit quality, duration, risk and return investors have comfort that they are not exposing themselves to undue amounts of risk.
Escala Bond Desk portfolios invest in senior and subordinated debt that is high in the capital structure providing a degree of surety with regards to capital value and interest payments.
No fees are charged for the custody service at Escala.
When an investor buys bonds in the over-the counter (OTC) market, the bonds are required to be held in the safe keeping of a licensed custodian until they mature or a decision is made to sell them. Licensed custodial service providers selected by Escala, such as Royal Bank of Canada (Sydney), hold a secure record of an investor’s beneficial ownership of bonds.
Reporting for Escala Fixed Income is summarised alongside other asset classes through the Escala reporting system (online portal) and is detailed in a separate specialist report for the investor’s fixed income portfolio.
Bonds are issued with a legally binding obligation, meaning the borrowing entity has a legal obligation to pay interest payments. This provides a degree of certainty around generation of income compared with dividends from shares.
As with income, there is a legally binding obligation for the borrowing entity to repay principal at maturity. This reduces the volatility in an investment portfolio and provides more certainty around expected returns.
International entities often issue debt in foreign currencies. Our investors have access to a wide variety of economic exposures that are not available through other asset classes. This provides diversification benefits without adding to currency risk, and enables investment in fixed income securities via a diverse pool of global companies and issuers.
Fees and commissions
Escala’s approach is to create a sustainable value proposition for investors that reduces costs significantly in comparison with current providers of direct fixed income.
Brokerage and product fees and charges
Direct bond transaction costs may be incurred on unlisted bonds at the equivalent rate to the prevailing bid/offer spread of the bonds.
Investing in ﬁxed income assets, such as direct bonds, can provide investors with capital stability and a reliable income stream. These investments can also generate a return in excess to cash or term deposits whilst retaining a degree of liquidity and capital stability.