Why Advisers should choose the Australian Bond Exchange
Building a balanced, diversified portfolio of corporate bonds can help your clients receive a regular, stable income. The Australian Bond Exchange can help you overcome the challenges associated with this process.
On our website you can find numerous articles outlining the advantages of including corporate bonds in clients’ portfolios, and some of the essential details that advisers need to know when introducing corporate bonds to clients. In this article, we’re going to explain how you, the adviser, can benefit from using the Australian Bond Exchange.
The marketplace for corporate bonds
The Australian Bond Exchange (ABE) is a leading marketplace for investing in fixed-income securities. We provide your clients with the opportunity to build a more financially stable future. We’re a one-stop shop providing all the services you and your clients need to invest in and manage a portfolio of corporate bonds. This includes bond trading, settlement and custodial services, and we offer all this with very attractive fees.
Local insights, global knowledge
Australians traditionally tend to have much lower exposure to bonds than investors in other countries. Fixed income accounted for just 19% of the portfolios in superannuation funds in 2022, compared to more than 50% of portfolios in Japan and the UK. We believe this reflects a lack of knowledge about the pros and cons of bonds. The ABE provides expert advice, up-to-date insights and educational material to introduce advisers and their clients to one of the world’s largest asset classes and help guide them on their investing journey. Founded by a close-knit team of four, who have more than 100 years’ combined experience in financial markets, we know corporate bonds and the financial system from the inside out.
A myriad of factors – many international – influence the direction of the Australian bond market. It is vital therefore to combine a global perspective with local insights when investing in the asset class. We have extensive relationships with banks and financial institutions and use leading-edge technology to provide clients with timely pricing, trading data and advice and the ability to execute trades swiftly and at low cost.
ABE’s bond-issuance service enables companies to issue debt quickly and effectively through its extensive network of customers, vendors and market participants. We can help you construct diversified and risk-managed portfolios, structured to ensure your clients receive regular income from corporate bonds issued by highly regarded companies.
All of the bonds on our platform undergo a risk analysis process. This involves an initial review of the product to determine if it is likely to meet ABE’s admission requirements. If not, it is rejected before any further work is undertaken.
ABE then undertakes a detailed assessment of the issuer and the product using the product documentation and any other relevant information about the issuer. Moreover, ABE will also consult with external experts as necessary.
An independent internal committee subsequently determines whether to admit or reject the product.
Our analysis of the products includes a detailed assessment of issues such as:
- The sources and availability of financial resources the issuer needs to meet its obligations to investors for both payment of coupons and repayment of principal at maturity.
- Specific features of the product including coupons, maturity, asset backing, or other security, covenants and other features designed to mitigate risk.
- The availability of key financial and other information concerning the issuer and product, including ease of access to the information for investors and the frequency and adequacy of updates. A key criterion here is to ensure ABE has sufficient and regular information to keep up to date with the issuer’s and the product’s performance during the life of the investment.
- Qualitative information concerning the issuer including its governance and reporting processes, the market it operates in, legal and regulatory considerations, the company’s reputation, and environmental and social impact.
- Risks and outcomes under various scenarios.
- In the event of a default, the recourse available to investors to recover their money.
Finally, you can be assured that your clients’ money is safe: the ABE is licensed and regulated by the Australian Securities and Investments Commission.
Disclaimer: This article contains general advice only. You need to consult with your independent financial, tax and/or legal adviser, and consider your investment objectives, financial situation, and your particular needs prior to making an investment decision. Australian Bond Exchange Pty. Ltd. and its authorised representatives does not accept any liability for any errors or omissions of information supplied in this document except for liability under statute, which cannot be excluded.