ABX Weekly 26th September 2018 Market update
All eyes on the US Fed this week on their anticipated interest rate hike. The interest rate hikes are fully priced in as well as the flow on effect into Australia. Analyst are very concerned that the share and property market feels very high and due a correction evidenced by the flow into safer assets.
Brewin with Nguyen Edition
This week I got a flash from my portfolio manager days where I got to construct a bond portfolio for a non for profit (NFP) company. It was good to go back to roots for a bit to construct a bond portfolio from scratch and meet all their investment objectives using quantitative analysis. Doing so I got in touch with my old contacts at large institutions where they all asked if I miss trading with the “big boys” and how do I find it here at the ABX. As exciting as dealing in large tickets was I told them I get more of a personal fulfilment with helping Aussie Mum and Dad investors. It definitely feels more real when building a nest egg with the hard-earned savings of people I talk to everyday.
The added benefit at being at the ABX is that I can share stories like these. A while ago day I was chatting with a client who has a horrible memory and every year forgets his wife’s birthday. And every year he gets in a whole lot of trouble!
In the middle the list of all the times she ripped him a new one I retorted “why don’t you get a bond maturing just before her birthday, that way when I ring up about it you know that it’s his wife’s birthday soon”. I also then mentioned he gets the extra benefit of using the coupon payments to buy her a lovely expensive birthday present.
Only a couple of days ago the same client calls through saying that it worked, and his wife has never been happier! Though she first thought he might have been cheating because he’s never remembered before and he had to explain the part bonds played. Its stories like his that really gives me purpose in what I do.
We all know James bond gets into sticky situations in his efforts to save the world. Whether it be a massive shootout, falling out of exploding plane or crashing a train, he always comes away relatively unscathed no matter how dire it got. He was always safe.
It’s the same with Bonds as an investment.
The key factors that make bonds a safer investment are:
- Issuer is legally obligated to pay the interest and principal
- With a set maturity date you have capital preservation
- High on capital structure, meaning bondholders are first to get paid
- Bonds perform well in stressed markets as investors have a flight to safety
- High Liquidity, can sell partial amounts at any time
No matter how scary markets get, Bond will be the safer option
Bond may have a license to kill but I got a license to invest!
Talk to your ABX representative today. We can even discuss your favourite James Bond actor. (if it’s not Sean Connery it may get heated)
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Have more certainty on your investments here : ABX weekly 26/09/2018
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