Education

Returns on investments just keep getting lower. As cashed-up investors look to alternative investments, fixed income funds have been beneficiaries. Fortunately, some funds have been sympathetic to investors’ plight and the need for income and dropped fees accordingly. However, others persist with a high fee agenda, are the fees worth...

Non-government debt, also known as credit or corporate bonds, is a key part of the broader fixed income universe. Historical performance data shows that credit has favourable risk and return characteristics that can complement an allocation to cash, government debt, and riskier assets such as equities. However, credit is a broad...

Credit ratings are important indicators of risk and return in fixed income markets. They give investors an indication of the perceived future risk they are taking and measure the perceived risk of future failure to pay promised income or capital at maturity. A high credit rating, in the AAA, AA or...

Every company has a capital structure. It tells liquidators the priority of payments in a wind up or liquidation scenario. It is important to understand that bonds can sit in three different positions in the structure and each position has a consequence for risk and reward. The lowest risk position...

One of the greatest advantages to ETFs is their liquidity. In fact, even when there isn’t a great volume of ETFs being traded on the exchange at a point in time, the ‘open-ended’ nature of ETFs mean that they should still be at least as liquid as the underlying...

An ETF is an open-ended investment fund, similar to a traditional managed fund, that is traded on the ASX – just like any share. ETFs aim to closely track the performance of a given index or asset class and provide the returns of that index or asset class –...

As more Australians increase their allocations to government and corporate bonds, it is important to understand the two different ways you can make an investment. Just like shares, you can either buy and sell them directly or you can have someone else manage them for you. In the fixed income...

The fixed income asset class covers a broad range of investments: deposits, bonds, hybrids and securitised investments such as asset backed securities and residential mortgage backed securities. Eight reasons to consider investing in some of the fixed income securities listed above: Diversification – you can access governments, companies and investments...

Even though interest rates are low and depositors get paid very little, especially if they pay tax, there are some significant advantages in deposit investments: Depending on the type of deposit, access to your funds if you need it. The Commonwealth Government Financial Claims Scheme (FCS), which aims to...

Macquarie Bank’s new hybrid with an attractive margin of 4.7% over 3 month bank BBSW, begs the question – is it a good time to buy hybrids? Current trading margins on hybrids average around 4.4% per annum but spiked at over 7% recently. Before CONVID-19, margins were significantly lower. Current yields...