Is the yield trade really over?

Livewire Exclusive

Over the past 12-months, the 3-year Australian Government Bond has risen just 21 basis points from ~1.8% a year ago, to 2.01% now. For an average retiree with an account balance of $200,000, this equates to an additional $420 of income per year.

Meanwhile, every ASX sector excluding health care has a higher yield than the 3-year bond, and the overall ASX200 had a yield of 4.42% as at December 2016 - all this is before franking credits. Dr Don Hamson, Managing Director of Plato Investment Management, still prefers the share market despite rising rates.

“The market, on a six percent yield including franking, still looks pretty attractive versus a 1.5% cash rate, bonds sub-3%, term deposits 2-3%.” – Dr Don Hamson

Watch the full video to hear how they’re focussing on income, without overexposing the portfolios to traditional yield sectors like REITs and infrastructure.


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