Joseph Balestrino Senior Vice President, Head of Domestic High Grade Corporate Bond Group Fixed Income Market Strategist Built on research, guided by experience Bonds have a place in just about any balanced portfolio, producing a potential source of return with lower volatility than equities. Although the importance of fixed income in a well-diversified portfolio remains constant, the fixed income markets continue to evolve, with a wider variety of bonds and issuers than ever before. In such a wide-ranging market, it can be difficult for individual investors to gain access to valuable opportunities. The need to factor in interest rate changes, yield curve uncertainties, economic conditions and other market variables can further complicate matters. That is why successful fixed income management demands a flexible approach that can effectively navigate a complex marketplace — together with substantial resources and experience — to uncover opportunities that add value. We invite you to learn more about Federated's distinctive approach to providing investors with the ability to weather the market's ups and downs with a broad range of fixed income solutions.

Key Reasons to Include Bond Portfolios in Your Investments
They May Reduce Risk. Generally, bonds don't move in tandem with stocks, so they may reduce the overall risk of an investment portfolio.That makes bonds an important diversification tool. They Have the Potential for Less Volatility. The three worst declines in bonds were modest compared to the three worst double-digit drops of stocks over the past 25+ years. In addition, bond portfolios may hold dozens or even hundreds of securities of differing maturities, credit quality and market sectors. As a result of this diversification, the effect of one bond's loss in value on the entire portfolio is not nearly as great as it would be for an investor who held only a single bond. They Provide a Regular Source of Income. Virtually all of the interest income received by a bond portfolio is distributed to shareholders each month. That's real income investors can use or reinvest. They Can Deliver Tax Benefits. Income from municipal bonds is exempt from federal taxes, and for individuals who live in the same state as the agency issuing the bond, the income may be exempt from their state income tax, too. Some bonds also pursue interest income that is exempt from the Federal Alternative Minimum Tax (AMT) as well.		Low Correlation Between Stocks and Bonds Bonds held their value against stocks during the last four major market declines. Source (top chart): Lipper Inc.; Source (above):Morningstar Direct. Stocks are represented by S&P 500 Index. Bonds are represented by the Barclays Capital U.S. Aggregate Bond Index. Past performance is no guarantee of future results. These charts are for illustrative purposes only and are not representative of performance for any specific investment. Diversification does not assure profit nor protect against loss.

Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.

Past performance is no guarantee of future results.

Diversification does not assure a profit nor protect against a loss.

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	Federated Fixed Income Portfolios (PDF) Meeting the Challenges of Today's Market.

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