Bond Investor Study

1011-6960

The Bond Investor Study by Charles Schwab was developed to explore the perceptions of individual investors about investing in the U.S. bond market.  The online survey, conducted by Koski Research in September 2011, was completed by 510 individual investors in the U.S. with a minimum of $250,000 in total investable assets and at least $25,000 in bonds that were purchased within the past two years.  These bond holders were fairly affluent, with an average of $486,000 invested in individual bonds, and an average of $1.8 million in household savings and investable assets.  

 



 

Key Findings

Finding #1:

 Two-thirds say it’s “extremely important” they receive competitive pricing on bonds

Importance of "knowing I'm receiving competitive pricing" where I buy/sell bonds
(All respondents) 

                

Q19: How important are each of the following to you for the firm or firms you use when buying or selling individual bonds?
(Base: All respondents = 510)


 

Attitudes regarding the pricing of bonds
(All respondents)

 Q15: How much do you agree or disagree with each of the following statements?
(Base: All respondents = 510)


Finding #2:

Bond investors are confused about what investment firms charge to buy or sell individual bonds 

Importance of "having a clear understanding of all mark-ups and fees"
(All respondents)

Q19: How important are each of the following to you for the firm or firms you use when buying and selling individual bonds?
(Base: All respondents = 510)

 

Perceptions on how firms are compensated for the sales of bonds
(All respondents)

Q16: Which of the following best describes how the firm(s) you use to buy individual bonds is compensated?
(Base: All respondents = 510)

  

Perceptions of mark-up by investment firms on each $1,000 bond

(All respondents)                                                        Aware of a mark-up: 27%
                                                                                                       Perceived average mark-up: $6.10

 Q17: If the firm you use to buy bonds is compensated by "marking up" the base price of a bond, how much is that mark-up on each $1,000 bond?
(Base: All respondents = 510) 


Finding #3:

 Two-thirds say it’s “extremely important” to know the issues or risks associated with a specific bond

Importance of when buying and selling individual bonds
(All respondents)

 

Q19: How important are each of the following to you for the firm or firms you use when buying and selling individual bonds?
(Base: All respondents = 510)

About The Bond Investor Study by Charles Schwab

 The Bond Investor Study by Charles Schwab was an online survey of U.S. investors conducted byKoski Research in September 2011, and has a 4.4 percent margin of error. A total of 510 respondents completed interviews. Survey respondents had a minimum of $250,000 in total investable assets, ranged in age between 25 and 75, had $25,000 invested in bonds directly, and had purchased individual bonds within the past two years.  Survey respondents were not asked to indicate whether they had accounts with Charles Schwab. All data is self-reported by study participants and is not verified or validated. Investors participated in the study between September 6 and September 16, 2011.
 

DISCLOSURES
Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks including changes in credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications, and other factors.

Schwab reserves the right to act as principal on any Bond transaction. In secondary market principal transactions the price will be subject to our standard mark up in the case of purchases and a mark down in the case of sales, and also may include a profit or loss to Schwab. When trading as principal, Schwab may hold the security in its own account prior to selling it to you, or may resell it after buying from you and, therefore, may make (or lose) money separately from the markup on the transaction.

© 2011 Charles Schwab & Co., Inc. (Member SIPC) All rights reserved.

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