Bonds and Interest Rates: Core Plus Investment Analysis and Features

This report examines bonds and interest rates, focusing on Core Plus investments and the financial strategies of JPMorgan Chase. It explores the concept of Core Plus investments, which are associated with "fixed income" funds. The report highlights that ONIAX mainly invests “investment grade” bonds and has the potential to invest 35% of the portfolio in other securities outside this core category. The report also analyzes the attractive and unattractive features of a bond issue, including face value, coupon rate, maturity date, and issue price. The conclusion emphasizes the importance of these features for investors. This document is designed to provide insights into bond market dynamics and investment strategies, with a focus on the practical application of financial principles.

Running head: BONDS AND INTEREST RATES
BONDS AND INTEREST RATES
Name of the Student
Name of the University
Author Note

1BONDS AND INTEREST RATES
Table of Contents
JPMORGAN CHASE................................................................................................................2
Core Plus investment..............................................................................................................2
Attractive and unattractive features of an issue.........................................................................2
References..................................................................................................................................4

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JPMORGAN CHASE
JPMorgan Chase and co. is the biggest bank of the United States. It is an investment
bank that deals in various financial services on a worldwide scale (Jpmorganchase.com,
2019). It has it’s headquarter situated in New York City. This bank is 6th largest in the world
in terms of total assets. It mainly issues Core Plus Bonds namely “JPMorgan Core Plus Bond
Fund (oniax)”.
Core Plus investment
Core Plus is a type of investment strategy that has its principal association with the
“fixed income” funds. This strategy enhances the flexibility of the fund managers by
increasing the available returns from the investments above the basic objective of the fund.
Fixed income investments are taken as securities to generate the extra volume of return.
However, these securities may appear to be risky at times but are associated with higher
potential of return as compared to core holdings of the fund. ONIAX mainly invests
“investment grade” bonds. However, it has the potential to invest 35% of the portfolio in
other securities outside this core category to generate the additional return.
Attractive and unattractive features of an issue
 Face value: It is the amount to be repaid to the bond holder after the maturity. If the
face value is high especially in contrast to issue price, the issue can look attractive to
an investor and vice-versa (Abramov, Radygin & Chernova, 2016).
 Coupon rate: It is the rate of interest associated with bond. The bond might look
attractive to an investor if the coupon rate is high and vice-versa.
 Maturity date: If the bond is issued for shorter duration ceteris paribus, then it might
look attractive to the investor and vice-versa.

3BONDS AND INTEREST RATES
 Issue price: If the issue price is less than the face value then such an issue might look
very attractive to the investor and vice-versa.
To conclude, if a company plans any future bond issue, then all the above mentioned
features of an attractive bond must be present in such an issue like high face value and
coupon rate on one side and low maturity period and issue price on the other. Then such an
issue would appear to be very attractive for investors.

4BONDS AND INTEREST RATES
References
Abramov, A. E., Radygin, A. D., & Chernova, M. I. (2016). Equity vs. Bonds for Long-term
Investors. Finansovyj žhurnal—Financial Journal, (3), 26-44.
Jpmorganchase.com. (2019). ANNUAL REPORT 2018 [Ebook]. JPMORGAN CHASE &
CO. Retrieved from
https://www.jpmorganchase.com/corporate/investor-relations/document/annualreport-
2018.pdf