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.

ABX Colour:

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)

Call on +61 2 8076 9343 or visit our website https://www.bondexchange.com.au/ for more article

Follow Us @AusBondExchange

Have more certainty on your investments hereABX weekly 26/09/2018

 

ABX weekly market insights

 

Australian Bond Exchange Pty. Ltd. (“ABX”) provides both general and specific financial product advice. This document and any information, advice or recommendation has been provided by ABX without taking account of your objectives, financial situation or needs. Because of this, you should before acting on any information, advice or recommendation from ABX consider the appropriateness of the information, advice or recommendation, having regard to your objectives, financial situation and needs. If this document, or any information, advice or recommendation, relates to the acquisition, or possible acquisition, of a particular financial product, you should obtain a product disclosure document relating to the product and consider the document before making any decision about whether to acquire the product. ABX, its directors, representatives, employees or related parties may have an interest in any companies or entities, or any financial product issued by companies and entities, and may earn revenue from the sale or purchase of any financial product, referred to in this document or in any information, advice or recommendation. Neither ABX, nor any of its directors, representatives, employees, or agents, make any representation or warranty as to the reliability, accuracy, or completeness, of this document or any information, advice or recommendation. Nor do they accept any liability or responsibility arising in any way (including negligence) for errors in, or omissions from, this document or any information, advice or recommendation. Any reference to credit ratings of companies, entities or financial products must only be relied upon by a “wholesale client” as that term is defined in the Corporations Act 2001 (Cth). ABX strongly recommends that you seek independent accounting, financial, taxation, and legal advice, tailored to your specific objectives, financial situation or needs, prior to making any investment decision. ABX does not make a market in the securities or products that may be referred to in this document.