Am I Missing Out On Managed Funds?
Some global bond funds and Australian fixed interest funds had fairly impressive performances in 2014, causing more interest rate securities investors to wish to explore the managed funds area more.
Read MoreSome global bond funds and Australian fixed interest funds had fairly impressive performances in 2014, causing more interest rate securities investors to wish to explore the managed funds area more.
Read MoreOnline savings accounts have not been immune to the long slow grind downwards that has affected both term deposits and cash accounts.
Read MoreIt is a well-known fact that Australians love to invest in shares and property, often to the exclusion of other asset classes. Depending on market dynamics, this can be a costly proposition and not one that delivers the best risk-weighted returns.
Read MoreTerm deposit rates in Australia have been grinding lower all of this year and with rate cuts now being priced back into the market from June 2015 to early 2016, TD rates are coming under further pressure. Indeed, in recent weeks Alliance Bernstein said, “We could easily see a couple of rate cuts” and did not rule out a cash rate of around 2.0% by the end of 2015, from the current 2.5%. While no one has a crystal ball, the market believes that an imminent rate hike is unlikely but the likelihood is that rates will go down rather than up.
Read MoreReaders will be familiar with headlines over the last couple of years concerning banks in Europe manipulating Libor. Recently the story has taken on a far more local flavour as ANZ revealed that seven traders caught up in investigations by the ASIC into possible manipulation of the Bank Bill Swap Rate had stepped down. ANZ told the ASX after the market had closed that it was “continuing to co-operate” with an ASIC investigation into historical trading in the BBSW market.
Read MoreTerm Deposits That Require 31 Days’ Notice Of Withdrawal
Read MoreAustralian interest rate investors tend to keep an eye on future moves in the cash rate cycle and what the Reserve Bank of Australia is likely to do next. This can help investors decide whether or not they are going to lock their money away in a term deposit for 30 days or five years or somewhere in between. If investors think that rates will rise in the near term, they will not want to lock their money away in long term TDs and are more likely to opt for short term TDs and other highly liquid instruments.
Read MoreAs readers of YieldReport will know, many of Australia’s banks have started to promote their cash accounts rather than their term deposits because, from the bank’s point of view, cash accounts are considered to be more ‘sticky’ kinds of deposits as far as Basel III capital adequacy goes.
Read MoreIn essence, benchmarks are a standard against which the performance of financial instruments like managed funds can be measured. More often than not, broad market and market-segment indices are used for benchmarking purposes. A benchmark is usually an index of securities from the same, or similar, class: stocks are usually compared against stocks, bonds against bonds and so on.
Read MoreA cautionary tale for everyday investor folk
Read MoreThe number and scope of fixed income funds in Australia has grown in recent years, reflecting the growing demand from investors for breadth and depth. Some of these fund use strategies that are new to the domestic Australian market and give investors greater scope to diversify their portfolios. From an investor perspective, since some of these funds are newly launched, their strategies may only have short track records. Some of the funds some of the time can assume significant credit risk. Naturally, past performance is not a guide to future performance. As a result of their brief track records, some may have had no experience of managing their way through a rising interest rate environment and tricky credit environments.
Read MoreBasel III is having a profound impact on the sort of debt instruments that Australian fixed income investors can access. All capital bonds in a Basel III-compliant environment need to carry a contingent clause that imposes losses on investors under certain conditions.
Read MoreIt is not unusual to come across the phrases ‘steepening yield curve’ and ‘flattening yield curve’ in commentaries discussing interest rate securities. Both phrases refer to the change in shape of the yield curve across different maturities. Interest rate securities come with different maturities and yields generally increase incrementally as maturities extend further into the future. Plotting these yields against each other produces a yield curve such as can be seen below.
Read MoreManaged funds can be a useful tool for investors, particularly investors who do not have the time or the skills to undertake a lot of research themselves in choosing individual assets in which to invest.
Read MoreThe mFund Settlement Service
Read MoreInvestors in Australian interest rate securities are likely to come across inflation-linked bonds but may not know what they are or how they differ to non-inflation-linked bonds. As part of its regular programme of issuance, the Australian Office of Financial Management (AOFM) routinely issues inflation linked government bonds. The following article aims to highlight the core things investors should know about inflation-linked bonds.
Read MoreInvestors in Australia trying to understand the interest rate securities market will often come across reference to 90 Day Bank Bill Futures. Launched in 1979, the 90 Day Bank Bill was the first interest rate futures contract to be listed outside the US.
Read MoreCovered bonds are much like normal bonds except that they carry an extra level of security ‘cover’. They are generally backed both by the issuer and by a specific pool of assets. The only issuers of covered bonds Australia are the big four banks plus Suncorp-Metway. Banks have typically issued covered bonds at tenors of 5 to 10 years, compared with a norm of 3 to 5 years for their unsecured bonds.
Read MoreThe Australian interest rate securities market is seeing increasing issuance of Residential Mortgage-Backed Securities (RMBS) from lenders. Because of the attractive ways many of these issues are priced, they are proving to be increasingly popular with investors.
Read MoreAustralian investors have been blitzed over recent years by newspaper headlines talking about hybrid securities. Many of these hybrids have been issued by high street banks, which can give investors a sense of comfort when it comes to overcoming their concerns about an asset class that can be perceived as risky. Because of this, it can be easy for investors to overlook the risk involved in hybrids in general if they are issued by well-regarded and well-known institutions. Hybrids carry risks that other investment instruments do not.
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