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Why Yield Convergence In Equities Should Have Investors' Attention

Mass contraction in global bond yields has led to yield convergence in the Australian share market where most stocks, whether they be industrials, financials or commodity producers, are now yielding between 4-6%. Probably the biggest surprise is that this convergence has attracted so little commentary, analysis and attention to date. In my latest Weekly Insights I explain why investors should pay attention: through convergence in yield, the market has created a new yardstick for investors to assess "risk" in the local share market. In essence, if a stock is yielding close to 4% it's probably a lower risk proposition with quite some growth and certainty attached. Higher yield implies higher risk, less growth (expectations) and less certainty. Buyer beware, thus, for finding that one gem that still offers 7-8%. Should investors re-consider because of the significant step-up in risk? As such, I believe the convergence has created a new tool for investors seeking equity exposure. Use it to your benefit (VIEW LINK)


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