The global bond market dwarfs the global stock market. The market for bonds is estimated at $67 trillion dollars, with nearly half of those bonds originating in the United States. That compares to a global stock market valuation of just above $40 trillion, even after the market crash.
Most of these bonds trade daily, just not as visibly as the prices set in the stock market. The opaque nature of the bond market leads to huge price differences and plenty of profit opportunities for unscrupulous brokers. Those wide spreads are giving financial companies an opportunity to narrow the spread and introduce retail consumers to a new, more transparent bond market.
That's what's behind Fidelity Investments' recent push to teach investors about bonds with seminars and online tools. The company is trying to make it easier and cheaper to create portfolios of individual bonds, and choose appropriate bond funds. More than 100 fixed income specialists are available by phone to help customers.
"They need to know that there is an alternative between stocks and cash or money market funds," says Richard Carter, vice president of fixed income securities at Fidelity's brokerage unit. "Bonds, whether individual securities or an appropriate bond fund, can fill that gap."Fidelity's Web tools enable wealthy investors to make a "bond ladder" of similar bonds maturing in successive years. A "scatter" graph allows you to set your risk parameters -- including coupon rate, maturity date and credit rating - and locate individual bond issues you can buy for your brokerage account. The new site offers everything investors need to become their own bond portfolio manager.