Fractional Bonds Investment Solution
26th January 2023
Access full PDF here: WiseAlpha Fractional Bond trading technology
What are Fractional Bonds?
WiseAlpha Technologies (regulated and authorised by the FCA with FRN: 751087) is the arranger of the Fractional Bond Programme.
Fractional Bonds are issued by WiseAlpha plc, an Irish incorporated special purpose vehicle with minimum purchase sizes of £1,000. Fractional Bonds give investors an opportunity to affordably gain economic exposure to individual corporate bonds that they are typically unable to trade in, owing to the very high (£/€100,000 or greater) minimum investment size.
The return on each Fractional Bond mirrors the exact return on the underlying bond and is fully backed and secured by the underlying bond. This results in a fractional economic participation in each underlying bond.
From an investor’s perspective, WiseAlpha plc’s role is economically similar to nominee holding companies utilised for equity products. This is because Wisealpha plc provides a direct pass through of their economics and does not retain any proceeds of the underlying bonds held.
A diagrammatic representation of the principal aspects of the structure currently in place appears below:
How it works
Structural Overview
WiseAlpha’s Fractional Bond Technology Solution
We work with institutions of all sizes, from banks to fintechs and traditional wealth managers. With us, you can access the global bond market through our Fractional Bond technology. We have a marketplace with over 150 Sterling and European bonds.
We provide a technology solution that speeds up the execution of trades, making it easier for portfolio managers to buy and sell on behalf of their clients.
Portfolio Managers can transact digitally in the bonds of companies such as EDF, Virgin Media and Charities Aid Foundation in £1,000 clips rather than £100,000 traditional minimum.
Through our API, partners can also pull data into their internal systems and reporting software so that they can view their client positions in one place and consolidate investment reporting.
Alternatively, partners can utilise our wealth management portal described below.
Super Diversification
A typical client portfolio with £500,000 might have 20% invested in corporate bonds.
How do you allocate £100,000 to corporate bonds? We see three possibilities.
- One bond. This will result in a portfolio that is highly concentrated in a single company
- Bond EFT. This provides diversification and liquidity
However, there are shortcomings with regards to being able to customise portfolio composition, risk, income, liquidity, and price transparency - WiseAlpha portfolio. Invest in 100 Fractional Bonds. This provides diversification and liquidity. Further:
- Reduces tracking error
- Provides more predictable
income cash-flow, enabling
your clients to plan for
upcoming expenditures - Each Bond has a maturity
date, giving certainty of
when you can expect
return of capital - Customise our portfolio
based on your company
and sector preferences. For
example, choose companies
that meet your ethical profile
Robo-Management Solution
Automatically build your client a well-diversified Fractional Bond portfolio.
Continuous rebalancing to take advantage of movements in bond prices, enabling you as the portfolio manager to focus more broadly on asset allocation.
Multiple risk profiles available. Currently we offer a Balanced portfolio and an Adventurous Portfolio.
You can tailor our proprietary algorithms to match your client portfolio needs, i.e. sector, company, yield, bond rating.
Wealth Management Portal
One login for you as the Wealth Manager to view your client accounts.
Allocate Fractional Bonds seamlessly across all your client’s portfolios.
Create multiple risk profiles.
Download account statements and tax reports. Pull data into your wealth management system via API.
Can be tailored to meet your requirements.
For more information
please contact:
partnerships@wisealpha.com
020 3927 2790