The recent by-elections should serve as a warning to investors reliant on franking credits for income. Significant swings to Labor while the Liberals stand by corporate tax cuts, increase the chance of a Labor victory and, with it, Labor’s stated policy of removing franking credit refunds to investors who do... Show More
In the scramble for customers, some fund managers and superannuation providers are taking on additional risk, investing in a range of assets and deeming them ‘cash’ when clearly they are not. Show More
Here I suggest five Indexed annuity bonds that are perfect for retirees looking for low risk, stable additions to their portfolio as well as helping meet minimum withdrawals for SMSFs in drawdown. Show More
Recently Deloitte Access Economics published “The Corporate Bond Report 2018 – Australia’s growing appetite for corporate bonds” which FIIG Securities commissioned to shine a spotlight on how the corporate bond market performed and the potential it offered to Australian investors. Show More
The high yield bond market continues to grow ahead of the FIIG High Yield conference on 17th May, with a new bond from Afterpay and news that Virgin Australia is preparing to issue in AUD Show More
This article is by guest contributor, Warren Hogan for FIIG Securities. Warren is an economist and financial strategist, and ex ANZ Chief Economist. Show More
Shareholders and bondholders have bought the Tesla growth story. However, my column in The Australian notes that Tesla's significant debt, negative free cashflow and losses loom large. Flagged higher production of the Model 3 hasn't materialised. Where to now for investors? Show More
The endless days of a fantastic summer are disappearing as is the consistent, upward trend of higher share prices, with volatility returning to the market. The sharp but relatively small correction in equities early February was enough to make investors stop and reassess portfolio allocation strategies. There comes a point... Show More
SMSF expert, Tony Negline gives his unique view of the proposed Labor Party changes to claiming franking credits. He provides suggestions on structuring your SMSF and how to utilise your franking credits. Show More
Labor's Batman by-election win in Victoria makes its proposed changes to franking rules more promising. It's a good time to reassess your investment decisions and potential loss of income, especially if you are invested in hybrids. These securities are expected to be less attractive and prices to be more volatile Show More
Investing direct or through exchange traded funds (ETFs), or managed funds has advantages and disadvantages; just like investing in shares, the decision depends upon the individual. While my preference is direct investment, the minimum needed is $250,000, making it difficult for smaller investors to access. Show More
FIIG Securities guest economist, Saul Eslake looks at the current global shift by central banks in ‘advanced’ economies to increase inflation, rather than keep it down as seen in the past decade. He also details why tax cuts and Trump tariffs are likely to put the US under inflationary pressure... Show More
Attention Sydney Airport bondholders, with the 2030s selling at a premium, it may be time to switch to the 2020 inflation-linked bond for great relative value. You don't have to hold bonds to maturity, investors prepared to trade can earn higher returns. This note tells the story. Show More
FIIG Securities guest contributor, Stephen Koukoulas says for more than two years, the annual underlying inflation rate has been between 1.6 and 1.9 per cent, locked below the RBA 2 to 3 per cent target. Here he talks about what this means, and takes a look at the data on... Show More
Stephen Koukoulas writing for FIIG Securities says that financial markets which usually yawn on budget night will be a little more focussed this year. They'll be looking for any signs of policy loosening, any debt and deficit risks and other policy changes aimed at sweetening the electorate: Show More
One month into 2018 and the AUD has punched above 80 US cents and is looking pretty perky. It is trading around its highs against the beleaguered USD since 2014. So, why is it up here again? Can it last? Is it time to sell? Or strap in for a... Show More
In this second of a three-part series from guest contributor, ex ANZ Chief Economist, Warren Hogan, this note assesses the outlook for US bond yields and explains why the US 10 year Treasury yield could be heading for 3.50%. Show More
A total of 46 of the ASX Top 50 companies issue bonds. This isn’t surprising as they are large international companies trading in foreign markets and require multiple sources of funding (see Table 1). But a couple of things did surprise me: Show More
First in a three-part series from guest contributor, ex ANZ Chief Economist, Warren Hogan, this note assesses the outlook for Australia’s short-term interest rates. Show More
Qantas is this year’s ASX 50 top performer, while Telstra earns the wooden spoon. Many shareholders focus on the largest ASX companies, like Telstra and Qantas, and hold significant allocations to them. Similarly, bond investors just starting out, or whose specific goal is to preserve capital, have a preference for... Show More
That's true William, in an ETF you have no maturity date, whereas direct investors have that comfort. Also, in some cases income is high but the yield to maturity is much lower and not attractive, so investors really need to dig a little to get the full picture.
Hi Peter, thanks for your comments. Hybrids are very complex investments and each one is different, meaning investors should read each prospectus to understand the risks involved. Investing direct and through a fund means you may be quite concentrated - probably worth reviewing. High yield bonds are great for diversity, as you can get exposure to lots of different industries. While they can also be complex, specific debt research should help you decide whether they are right for your portfolio. One last point, many investment grade bonds are now yielding over the 4% mentioned from your hybrid fund. These are higher rated and less complex than the hybrids. Let me know if you are interested in learning more about bonds. Regards
Thanks Mr T, I agree its all about the risk and return equation and whether as an investor you think you are being paid enough. It's always interesting to compare what else is available and zipMoney as a competitor is a worthy benchmark.
Hi Stephen, The perceived credit risk of the company issuing the bonds was the most important factor during the GFC. Very low risk company bonds were ‘flight to quality’ and performed well. At this point in the cycle investors preferred Longer dated fixed rate bonds with long duration to lock in high rates - they reasoned interest rates would have to fall. High quality floating rate bonds with short durationwould have also performed well, but poorer credits less so, given a greater perceived chance of default.
Thanks Bob, I'm not surprised its been a real out performer.
I agree the proposed changes are a long way from becoming law and I would expect some concessions if Labor win the next election but there is no guarantee existing terms will be grandfathered
Hi Andy, I agree its low and not very appealing.The main investors in this bond would be institutions, mandated to hold certain investment grade percentages. Typically they can't access the same deposit rates as retail investors and huge sums mean the government guarantee to $250,000 doesn't cover their investment. At this stage of the cycle, when interest rates are low and many assets look over-valued, investors start to focus on capital preservation rather than yield. Telstra is a large corporate, known to overseas investors and should have no trouble refinancing or repaying this bond when the time comes. The other benefit of low risk bonds is that they are generally liquid, allowing investors to access capital on a T+2 basis and invest in something else. There are other investment grade bonds available paying circa 4%, that might make better sense.
Hi Geoffrey, unfortunately we can only offer these bonds to 'Australian residents for taxation purposes'. You'll need to find a bond dealer/ broker in New Zealand in order to set up an account and trade.