Beware, hybrids hidden as cash

Elizabeth Moran

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

Hybrids vs Equities: How Does Risk vs Return Trade-Off Stack-Up?

Christopher Joye

Two quick charts looking at the risk and return trade-off between ASX equities and ASX major bank hybrids. The first chart considers the current cash (unfranked) and fully franked dividend yield on the ASX200 index versus a range of major bank hybrid yields in both franked and unfranked terms. The... Show More

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Buy Fear and Sell Greed

Christopher Joye

In my AFR column I argue that Donald Trump's "tape bombs" are the tail wagging the global financial market dog right now, and this volatility begets opportunity (click on that link to read for free or AFR subs can click here for direct access). Excerpt enclosed: Show More

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Chaos Creates Opportunities for Bonds and Hybrids

Christopher Joye

Most investors have polarised portfolios bifurcated between cash deposits and equities. Few appreciate that these two very different securities span a rich corporate capital structure that allows for a much more continuous distribution of risk and return experiences. Show More

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Should you sell bonds/hybrids to buy ASX listed RMBS?

Christopher Joye

Switching out of senior bonds and hybrids to invest in Australian residential mortgage-backed securities (RMBS) while house prices are falling---and likely to remain weak for years---is one of the more surprising trades I have seen of late. It is right up there with selling major bank hybrids on the ASX... Show More

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Selling in a bull market

Livewire Exclusive

In the midst of a bull market, there’s no shortage of commentators, brokers, and friends with the latest tip on what to buy. However, nobody ever says much about selling. Baron Rothschild said the secret to his success was “I never buy at the bottom and I always sell too... Show More

Hybrids will need a rethink under Labor’s latest policy

Elizabeth Moran

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

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What Bill Shorten’s New Tax Rules Mean for Equities, Hybrids and Property

Christopher Joye

Labor leader Bill Shorten is certainly bold when it comes to assaulting the financial heartlands of Australian housing, equities and super. Show More

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Why CBA Hybrid Might be Attractive

Christopher Joye

In my AFR column I speculate that sanity could prevail and the mooted CBA hybrid that is expected to be launched next week could actually be attractive, offering a much higher margin and shorter maturity than Wesptac's latest issue (ASX: WBCPH) (click on that link to read for free or... Show More

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Taking the headache out of Hybrids


If you already own Hybrids you’ll be familiar with some of their benefits: attractive yields, access to franking credits and lower volatility relative to equities. However, as terms and conditions differ from security to security, Hybrids can be a complex and admin intensive asset class for investors. Show More

RBA Way Wrong on Unemployment

Christopher Joye

In the AFR today I explain why long-term forecasting is a waste of time; why Australia's jobless rate in December 2018 will likely be 0.75% to 1.0% lower than the 5.5% rate the RBA is currently forecasting; why the enigmatic Guy Debelle might one day make a great governor; and... Show More

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Westpac's Landmark Hybrid Impresses

Christopher Joye

In the AFR I argue that Westpac's landmark US$1.25 billion hybrid issued into the US market this week, which was initially 11x oversubscribed, will reduce the bank's need to issue future hybrids on the ASX and thereby choke domestic supply. This 10 year hybrid was also priced at a credit... Show More

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Smallest Budget Deficit Since 2013 + Why Hybrids Are Cheap

Christopher Joye

In the AFR I review the government's latest monthly financial data, which shows that Australia's budget deficit is the smallest since 2013 and currently running much better than expected care of strong commodity prices, corporate profits, and asset price appreciation. I also present new research that prices the downside risk... Show More

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Dysfunction Across Bank Capital Structure

Christopher Joye

In my Weekend AFR column I offer my latest analysis of relative value investment opportunities across the banks' capital structures in the context of the recent AMP subordinated bond deal, highlighting what appears to be dysfunctions between senior bonds, subordinated debt and hybrids (click on that link to read for... Show More

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Why I Bid for CBA's Hybrid + Why Bligh is Brilliant for Bankers

Christopher Joye

In The AFR I explain why CBA's cerebral treasury team has done a brilliant job executing the latest ~$1.5bn ASX hybrids issue, called Perls 9, which was very heavily oversubscribed on the back of CBA paying 30 basis points in additional annual spread (or income) on top of what was... Show More

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No, major bank capital raising is *not* over

Christopher Joye

It never ceases to amaze how muddle-headed analysts and investors can get when it comes to understanding our financial system. In this case, the subject is whether the major banks are done-and-dusted with deleveraging their balance-sheets---as most have presumed---or whether there is indeed more capital raising to come. Australia's impressive... Show More

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No more hybrid duds, please

Christopher Joye

In The AFR I argue that it's time for the major banks to get "long-term greedy"---as my former Goldman Sachs bosses would implore---when it comes to pricing new deals in the fickle ASX hybrids market. Current market pricing implies hybrids are trading around fair value and smart hybrid issuers will... Show More

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Top trade of 21st century...

Christopher Joye

In The Australian Financial Review I reveal what is likely one of the best non-tech trades of the 21st century (with a 2,000% gross return) that I had to fly to Las Vegas to learn about; discuss the top trades in my own portfolios in 2016, which focussed on the... Show More

Housing market is not cooling

Christopher Joye

In The AFR I reveal that Australian house prices have jumped another 0.8% over September and by 2.7% in the September quarter, which is north of an 11% annualised pace in an embarrassing contradiction of the RBA's claims that its May and August rate cuts had not stimulated "a new... Show More

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No bank dividends for investors in next recession

Christopher Joye

From my AFR column today: "I don't think Australian bank shareholders are cognisant of the risk that if equity capital ratios fall modestly, there are new automatic restrictions imposed by the regulator on the distribution of earnings that mean dividends may not be paid. In fact, it is likely that... Show More

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