Capital stability and attractive income – why advisers should be considering corporate fixed income for client portfolios
One year ago, U.S. 10-year Treasury bonds were yielding 0.74%pa while today, they offer 4.61%pa – and coupon payments on corporate fixed-income securities are even higher. With widespread global economic and geo-political uncertainty, it’s unsurprising to see many investors rebalance portfolios in favour of asset classes which can provide a greater degree of stability and […]
Hiding in Cash – When Defensive Becomes Expensive
With persistent uncertainty in global markets, it’s unsurprising to see increased demand for cash and cash equivalents, especially given short-term money markets are currently yielding circa 5.45% pa. However, while cash undoubtedly has an important and irreplaceable role to play as part of the investment mix, it shouldn’t be perceived or used as a substitute […]
In a Higher for Longer Environment, Fixed Income Needs to be Considered
With inflation likely to remain higher for longer than expected, interest rates are also likely to remain elevated as central banks seek to prevent any resurgence of exuberance. For many investors, this environment is boosting the allure of fixed-income relative to global equities markets, and this is unsurprising given the current disparity between the available […]
Why Fixed-Income Securities Play an Important Role Within Investment Portfolios
Understanding the important role which fixed-income securities play within investment portfolios is crucial for investors of all persuasions, regardless of whether income generation or capital growth is the primary objective. The 60/40 Portfolio The 60/40 portfolio has formed the bedrock of the modern investment portfolio for decades, and for good reason. Within such a portfolio, […]
Structuring client portfolios for a better retirement
When it comes to effectively structuring client portfolios for retirement, allocating investment capital to safer and less volatile asset classes is imperative. Fixed-income securities including corporate bonds can play a pivotal role in providing much-needed portfolio stability and predictable income, reducing some of the inherent volatility associated with equity investing. While fixed-income securities generally move […]
Corporate Fixed Income Securities – What Are the Benefits?
The corporate debt market is one of the largest financial markets in the world, providing the means for large corporations to raise money directly from investors to fund their operations. While smaller organisations are usually limited to bank and/or non-bank lenders to acquire funding, larger organisations can bypass such intermediaries and raise funds directly from […]
Financial Stability in Retirement: Why Advisers Should Consider Fixed-Income Securities For Clients
New research released last week revealed that the top concern for Australians aged over 50 was running out of savings in retirement. The results are somewhat unsurprising given both inflation and interest rates have surged since COVID-19 lockdowns. While inflation has begun to erode the purchasing power of savings, aggressive monetary tightening has slammed the […]
Why Bond Yields Could Stay Higher For Longer
Despite rapid surges in interest rates to combat inflation, many economies are still running hot with very low unemployment and positive GDP growth. Despite 11 interest rate hikes, the U.S. economy continues to be the strongest performer out of the G7, as measured by GDP growth since pre-pandemic levels. Growth increased by 2.4% in the […]
Bonds Are Back – Why Advisers Should Be Considering Fixed Income Securities For Client Portfolios
The global response to COVID-19 unleashed a wave of fiscal stimulus and set into motion the beginning of the end for the prevailing ultra-low interest rate environment. From supply chain disruptions to a dramatic increase in the global money supply, the dynamics of the global economy have undergone seismic changes, ushering in a new era […]
Managing volatility with corporate bonds
Corporate bonds can play a key role in stabilising investment portfolios during periods of heightened volatility in financial markets. Not only do they exhibit lower price instability compared to equities, but as long as the issuer of the bond remains solvent, you will continue to receive fixed coupon payments until maturity. What are corporate bonds? […]