Podcasts about fixed interest

New Zealand's nascent private credit industry could account for up to 5% of business lending to operating companies over time, suggests Aotea Asset Management (AAM) executive director Will Carnachan.AAM, which launched three years ago, is a corporate debt fund manager organising wholesale investorsto contribute to direct secured loans to businesses. Private credit, a form of shadow banking, has made headlines in the US, Europe and Australia over the past couple of years. The International Monetary Fund estimates the fast growing "opaque" and " highly interconnected" private credit market topped US$2.1 trillion globally last year, and over time "could become a systemic risk for the broader financial system."In a new episode of interest.co.nz's Of Interest podcast, Carnachan says in NZ the largely unregulated private credit industry's probably a decade behind where it's at in larger economies, including Australia's."I don't necessarily think this industry will, or should, become heavily regulated over time because a big part of the driver here is to move risk away from deposit taking institutions which carry systemic risk. But it is really important, I think, for the longevity of the industry that managers are being really transparent around how they're conducting themselves, how they're valuing their assets," Carnachan says."There is huge potential for this industry to grow...If you look at that business lending segment in New Zealand, it's roughly $120 billion, a lot of that's property linked. If you say half of that relates to operating companies, $60 billion, I think realistically where private credit investors like ourselves could come in to help manage some of the risk it's really between 2% to 5% of that over time. A relatively small chunk of the market, but will create options for those great kiwi businesses that are looking to grow, looking to expand, looking to acquire."In the podcast Carnachan talks about who the private credit investors and borrowers are, the interest rates they earn and pay, how the floating rate loans are priced, loan covenants and syndications involved, the fees AAM charges, the impact of high interest rates and falling interest rates on private credit, where the sub-investment grade borrowers rank in S&P Global Ratings' methodology, how AAM's portfolio currently has no credit loss issues or impairment issues, and more."In terms of the return profile that we offer, we're a floating rate product, so we provide a spread or a margin above. We use the Official Cash Rate as the benchmark because it's well understood. So what that means is we are an inflation hedge because as inflation rises or falls, typically market rates move commensurately. But we can always lock in an attractive margin over that benchmark rate," says Carnachan."And I think it's important to understand in terms of that marginal credit spread, we do a lot of work around ensuring that that is driving really good risk adjusted returns for our investors, and also taking into account the fact that these underlying investments are relatively illiquid. So it's not a product that you can trade in and out of. It's a hold to maturity product.""We are effectively a fixed income product that provides, we think, a really attractive diversifier away from bonds and yield stocks."*You can find all episodes of the Of Interest podcast here.

In this episode of our In The Black Segment, Louis is joined by Christopher Joye, Chief Investment Officer and Portfolio Manager at Coolabah Capital. Christopher is also a Contributing Editor with The Australian Financial Review and well-known as one of Australia's leading economists, policy advisors and fund managers.    Throughout the episode, Chris articulates; his outlook for the macro economy and identifies what it means for interest rates, explores why there is tremendous downside risk to growth assets, and flags where to allocate capital in the current environment.   Should you have any questions on the content within this episode, please reach out using the details below.   Connect with Louis on ⁠⁠LinkedIn⁠⁠ Connect with Christopher on ⁠⁠LinkedIn⁠⁠   Explore Coolabah's investment menu ⁠here⁠ Find out more about Chris & Coolabah ⁠⁠here⁠⁠   Reach out to us at: ⁠⁠Makingcentsofitall@vincents.com.au ⁠⁠or on LinkedIn with any questions, feedback or topic requests. The information contained in this podcast should not be interpreted as advice. It is general in nature and does not take into account your individual financial situation or needs and should not be relied upon. Before making any investment, insurance, tax, property or financial decision we recommend you consult with a licensed professional adviser to consider your unique circumstances.

I-bonds purchased between Nov 1, 2023 and April 30, 2023 have a fixed interest rate of 1.3%, the highest fixed rate in 15 years. Combined with the inflation rate, they are paying 5.27%. If you've ever been interested in buying I-bonds, now is the time. If you don't particually want more I-bonds in your portfolio but you have I-bonds previously purchased at a lower fixed interest rate, you may consider cashing those out and buying the current I-bonds. Individuals are limited to buying $10K of I-bonds annually. There is a way to get more I-bonds at the current 1.3% fixed rate by having someone else purchase gift I-bonds for you. This is perfect for married couples, who can buy gifts of I-bonds for each other. In this episode, I discuss how gifting I-bonds works and how this can be used to load up on the current I-bonds available. The IRS has a video to guide you how to purchase I-bonds as a gift on their website https://treasurydirect.gov/indiv/tools-videos/purchase-gift-bonds/Please subscribe and leave a review on your favorite Podcasting platform.  If you want to start your path to financial freedom, start with the Financial Freedom Workbook. Download your free copy today at https://www.GrowYourWealthyMindset.com/fiworkbook You can learn more about Elisa at her website or follow her on social media.Website: https://ww.GrowYourWealthyMindset.comInstagram https://www.instagram.com/GrowYourWealthyMindsetFacebook https://www.facebook.com/ElisaChianghttps://www.facebook.com/GrowYourWealthyMindsetYouTube: https://www.youtube.com/c/WealthyMindsetMDLinked In: www.linkedin.com/in/ElisaChiang   

Tune in as Warren Ingram,  Sajjaad Ahmed and Conway Williams from Prescient Investment Management, reveal the intricacies of debt markets and the pivotal role of analysts. Discover the synergy between fixed interest investments and equities, strategies for portfolio diversification, and tips for optimizing returns. Delving into the less-publicized yet vast world of debt markets.Looking at why debt markets get less media spotlight compared to stock markets.Unpacking the critical role of quantitative analysts in mining data for investment signals.Deep dive into the significance of debt instruments from governments and corporations in the financial ecosystem.Exploring the symbiotic relationship between fixed interest investments and traditional assets like stocks.Strategies for portfolio diversification: How fixed interest investments can stabilize your journey to retirement.Discussing the advanced tactics of leveraging credit and credit spreads to potentially enhance returns.Have a question for Warren? Don't forget to voice note your questions through our WhatsApp chat on (+27)79 807 8162 and you could be featured in one of our episodes. Follow us on Twitter, LinkedIn and subscribe to our YouTube channel for more Financial Freedom content: @HonestMoneyPod

Markets with James Turp Head of Fixed Interest at Sanlam Investments

UniSuper, 2023's best performing mega fund, delivered a 10.3% return on its default Balanced option - in a year dominated by high inflation, the fastest rate hikes in decades and the ongoing war in Ukraine.Rob Hogg, Head of Fixed Interest and Macro Research at UniSuper, talks to Sean about the result, as well as the outlook and what it means for asset allocation.This is general information only. You should seek professional advice before making investment decisions.Find out more: https://fearandgreed.com.auSee omnystudio.com/listener for privacy information.

The Year was 2022: No asset class globally escaped the enormous price resetting created by the most aggressive tightening cycle seen in history. Fixed interest markets felt the most pain: US 10-year bonds fell 39.7% for the year. If we were lucky enough to be Marty McFly and set our dash clock back to 28 December 2021 (the market high), how would you manage a bond portfolio differently?During this podcast, Craig discusses topics such as how Anthony and Western Asset Management adopt such a hugely successful fixed interest strategy to remain ahead of the market. How do you position fixed interest during an economic cycle? How do you reshape a bond portfolio given the frequently changing central commentary? Most importantly can bonds still act as a core defensive asset class – for all investors?Craig sits down with Anthony Kirkham, the Head of Melbourne Operations and Investment Management for Western Asset Management. Anthony personally manages in excess of AUD$18 billion in fixed interest, spanning across more than 33 years of experience. Anthony is the Head of the Australian Investment team, Head of Australian Operations, and Portfolio Manager at Western Asset since 2007. Mr Kirkham holds a Bachelor of Commerce degree from the University of Melbourne, a Master of Applied Finance from Macquarie University and a Graduate Diploma from the Securities Institute of Australia. Anthony also holds the CFA designation.Founded in 1971, Western Asset Management is one of the world's leading fixed-income managers. With a focus on long-term fundamental value investing that employs a top-down and bottom-up approach, the firm has nine offices around the globe and deep experience across the range of fixed-income sectors. Western Asset Management's parent company, Franklin Templeton, operates in 155 countries. Franklin Templeton offers boutique specialisation on a global scale, bringing extensive capabilities in equity, fixed income, multi-asset solutions and alternatives. With offices in more than 32 countries and approximately 1,250 investment professionals, the California-based company has 75+ years of investment experience and approximately A$2.1 trillion in funds under management as of 31 March 2023. Disclaimer: The information in this podcast series is for general financial educational purposes only, should not be considered financial advice and is only intended for wholesale clients. That means the information does not consider your objectives, financial situation or needs. You should consider if the information is appropriate for you and your needs. You should always consult your trusted licensed professional adviser before making any investment decision.

All is not what it seems and those who are swayed by this fear-mongering often get caught out and its costs them dearly.   To connect with Jason Whitton Website Facebook LinkedIn Instagram  To connect with Andy Fenton Website Facebook Instagram LinkedIn  

All is not what it seems and those who are swayed by this fear mongering, often get caught out and it costs them dearly… Let's Wealth Coffee Chat!

In this episode, we dive into the subject of Bonds and Fixed Interest Investments.   What is a bond investment? How do they work? Is a bond a good investment? What is the downside to bonds? How risky is the bond investment?   How interest rates can be attractive or, indeed, a poison chalice depending on what you're looking to achieve with your money. Explore that with Andrew Baxter in the video, and look at the pros and cons of having bonds and fixed-interest investments.   00:00 Intro 01:37 What is the bond? 02:40 Bonds, in terms of the debt, based on the credit default risk, how are they rated? 08:35 What happens if inflation goes up or interest rates start to move higher? 10:20 Credit Crunch 2023: Its Impact On The Banking Sector Around The World And Australian Market 11:01 An equity market and the US two-year treasury 11:45 If you are a retail investor, would you ever have exposure to a super fund? 13:20 What are the downsides of having bonds? 15:48 Are there any other instruments or fixed-interest investments similar to bonds?   Subscribe to our Channel: https://www.youtube.com/channel/UCfmaldKMEUc5qXeIQ7zEBeA?sub_confirmation=1   FREE Online Training with Andrew Baxter: https://bit.ly/cod-online   Subscribe to Money and Investing Podcast: http://www.moneyandinvesting.com.au/   

In this episode, Aaditya Thakur, Senior Vice President and Portfolio Manager at PIMCO, joins us to unpack the reasons why 2022 was such a challenging year for fixed interests and how this impacts 2023 and beyond. He explores inflation, recession risks, the implications of China reopening, as well as the positive developments in the market and what this means for fixed interests and investors constructing their portfolios.

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Trends occur in all facets of life. Including real estate. The two biggest trends at the moment are the growing interest in estate living and more home buyers asking for fixed interest rates. But, are these just fads or is there rhyme and reason behind these trends? In this episode of the Private Property Podcast, we aim to unpack these trends with Real Estate expert Ana Trujic Constanti from Harcourts. Subscribe to our Youtube Channel and easily buy your first property at www.privateproperty.co.za. Private Property aims to revolutionise the way South Africans find their next home by making th process easier, simpler, and faster. Find your next home on www.privateproperty.co.za #PrivatePropertyPodcast #PropertyInvestment #FirstTimeHomeBuying #EstateLiving #Propertytrends Estate living and a fixed interest rate

There was plenty of food for thought and grist for the investment portfolio mill, coming out of the recent Markets Summit 2023 "Every VUCA cloud has a silver lining!". - Jonathan Ramsay, InvestSense on Portfolio Construction Forum.

Over the past decade, few asset classes have consistently delivered attractive returns with investors capital exposed to significant volatility. As markets change, investors have had an uphill battle keeping up and positioning their portfolios to protect and grow their capital. Over time, private debt has consistently demonstrated a low correlation to public markets and is an attractive alternative source of income in a portfolio. Due to its position in the capital structure and ability to price at a floating rate, private debt, managed by an experienced manager, has and will continue to provide capital protection, stable returns and increasing income against the effects of rising inflation and interest rates. If the question is how to achieve an attractive risk-adjusted return through all economic environments, then private debt is the answer. The future ain't what it used to be - except for private debt. - Watch Metrics Credit Partners' Andrew Lockhart on Portfolio Construction Forum and earn 0.50 CE/CPD hrs

A disciplined, scenarios-based approach to determining your views on the outlook for markets is essential to building portfolios capable of achieving client goals when the future ain't what it used to be. In this third step of our hypothetical Investment Committee meeting, a diverse panel of asset class experts debates the implications of the three economic scenarios outlined in the Economic Scenarios Roundtable for the medium-term (three years) for asset class returns. At the end of the panel discussion, the Investment Committee (Strategies Conference 2022 delegates) votes on the likelihood of each of the three scenarios to determine which is most likely, next most likely and least likely. The outcomes are then inputs to the Asset Allocation Roundtable. - Watch Rob Mead, Joseph Lai, Jacob Mitchell and Isaac Poole on Portfolio Construction Forum and earn 0.75 CE/CPD hrs

Josh discusses the rare opportunity for investors right now where fixed rates are paying rates not seen since 2008. Also, T. Row Price says stay the course, but Josh disagrees. Plus, why you should need a distribution strategy to accompany your 401k of IRA.

Now you have the opportunity to look at several homes in your area of interest compared to 90-plus days ago. We touch on the actual data every seven days Wednesday to Wednesday this week. Carmel, Fishers, Westfield, and Noblesville markets have a good inventory of homes. Listen to our days on market for each area. Some homes going for over the asking price as well some properties are being reduced from the list price. We are returning to a more stable market compared to Spring 2022. Interest rates are inching up but we are not exactly sure what the FEDS are doing in Washington. We will keep you posted on rates. Have a topic you what to know about email us. Also please follow us weekly. ★ We say always use a professional real estate agent that knows your area of interest. A Realtor's advice can really help you make the most important decision when buying or selling a home. Reach out to our team of expert realtors this week. Need some real estate information... reach out to us here: info@Indypodcast.Media We will send it directly to the agent you request on our podcast and get your questions answered. Please listen to the mortgage market rates weekly on the podcast. If you need a mortgage quote email us and we will send it to one of our Indiana-licensed mortgage experts. Info@IndyPodcast.Media We do not post rates because mortgage rates change a few times a day! Banks vs.Lenders vs. Brokers there is a difference in rates and closing costs. Our message do-not pay points! Coming on the podcast: Boone County & Hendricks County - Market Stats Thank You to the Shelly Walters EXP, Justin Griffith Keller Williams, and Kyle Morris FC. Tucker Podcast: Indy Real Estate Market, Host Tony Cardenas #IndianaRealtors #Mibor #HamiltonCountyHomes --- Support this podcast: https://anchor.fm/indyrealestatemarket/support

Wealth Wine and Wisdom - Rents rise 30%! Fixed interest rates go down! US recession? 50,000 people population boom and much more! Join Andy and Jason to debrief the week....grab a beverage kick off the shoe and let's do this!   To connect with Jason Whitton Website Facebook LinkedIn Instagram  To connect with Andy Fenton Website Facebook Instagram LinkedIn

The latest market insights for your upcoming end of year client meetings. Damian Cilmi hosted this live webinar panel with Nikki Thomas, CFA of Magellan Financial Group, Paul Parsons of Northcape Capital and Charles Jamieson of Jamieson Coote Bonds to discuss the key market drivers for bonds, domestic and global equities over the remainder of this year and into 2023. Looking at inflation, interest rates and how to position a portfolio in these market conditions.Please note that this podcast was originally hosted in live webinar format, and makes reference to slides and charts. If you'd like to watch the video from the webinar, including the slide deck, you can stream it here on vimeo: https://vimeo.com/718187330

In this episode, Travis Grant is joined by Robert O.Abad (Western Asset Management) and Eu Joe Chan (BT Investment Team) to discuss inflation, central bank tightening cycle, the impact on markets and investment opportunities as an active fixed interest manager . Robert also takes a deep dive into what neutral rates may look like and what other key risks a bond manager needs to consider outside central banks. Robert O. Abad, Product Specialist - Western Asset Management Company, LLC Robert O. Abad is a Product Specialist in Western Asset's Pasadena office, bringing 33 years of industry experience to the Product Group. He is a member of the Multi-Asset Credit Investment Team, the Global Multi-Sector Investment Team, and the Global Portfolio Team. Eu Joe Chan – Portfolio Manager – Income & Alternatives, BT Investment Team Eu Joe is the portfolio manager for Fixed Interest, Credit & Private Market sleeves of BT Investment portfolios. He is responsible for portfolio construction, manager research, and on-going monitoring of investment strategies. Disclaimer: The podcasts are for adviser use only. They must not be made available to any person and any information in them must not be communicated to any person without the prior written consent of BT, part of the Westpac Banking Corporation. The views expressed in this webinar are those of the presenters alone unless otherwise quote, and do not reflect the views of policy of any company in the Westpac Group. The Westpac Group accepts no responsibility for the accuracy or completeness of, nor does it endorse any such opinions. To the maximum extent permitted by law, we intend by this notice to exclude liability for these opinions. The information in this podcast is provided solely as general information and it should not be considered a comprehensive statement on any matter or relied upon as such. The information provided is factual only and does not constitute financial product advice. Before acting on it, you should seek independent advice about its appropriateness to your or your clients objectives, financial situation and needs. Any projections in this webinar are predictive in character. Whilst we have used every effort to ensure that any assumptions on which any projections are based are reasonable, any projections may be affected by inaccurate assumptions or may not take into account known or unknown risks and uncertainties. The results actually achieved may differ materially from any projections herein. Past performance is not a reliable indicator of future performance. The podcast recordings are being shared with the prior written consent of our participants.

Rising interest rates will create casualties and collateral damage in asset prices, but will bring back market discipline. Post pandemic, the global economy is re-opening and so are markets, resulting in excess demand, price increases and what seems to be full employment. QE is in reverse. Central banks are beginning their run to raise interest rates from historically low levels, after using Quantitative Easing programs to provide demand to suppress bond yields. Markets have not gone through such a large transition before and therefore there will be uncertainty. A return of market discipline will require a rethink of what "defensive" even means, and a very different playbook for active management. - Richard Quin, Bentham Asset Management. Earn 0.50 CE/CPD hrs on Portfolio Construction Forum

Record low interest rates have fundamentally changed the playbook for income investors. The traditional havens of stocks and bonds are out of reach with compressed yields and stretched valuations. This has made the search for reliable and attractive risk-adjusted sources of income a dominant narrative for investors, who may often resort to an undesirable move up the risk curve to maintain returns. For institutional and wholesale investors, CRE debt is widely accepted as an asset class, providing diversification and strong, risk-adjusted returns. Australia has a relatively under-developed private debt market, with big banks historically dominating. With banks withdrawing, alternative lenders have greater opportunity. Coupled with rates likely to rise in 2022, it may be a good time to consider CRE debt. - Nick Bullick, Qualitas. Earn 0.25 CE/CPD hrs on Portfolio Construction Forum

A great attack scores points, but defence wins premierships. The same principal applies to investment portfolios where, by attacking with allocations to growth stocks, investors can run into problems when equity markets fall. But by making private debt the centre of a defensive strategy, investors can win in all conditions. Private debt protects investors via its position in the capital structure, contractual obligations and the close relationship between borrower and lender. It also shields investors' income against inflation and interest rates by pricing at a margin above official rates. So, as central banks signal rate rises this year to combat inflation, the price and earnings of equities may fall, but private debt investors' income should rise. Those who understand these advantages know that private debt is the best defensive strategy for all market conditions. - Andrew Lockhart, Metrics Credit Partners. Earn 0.50 CE/CPD hrs on Portfolio Construction Forum

Ayrton Oliver who's a portfolio manager from Generate Kiwisaver explains some investment jargon to LloydSee omnystudio.com/listener for privacy information.

In a world of rising yields, finding value in bond markets is as challenging as it's ever been. Fixed income investors must know that what's worked in the past might not work going forward. Duration is a key consideration to delivering meaningful bond returns, however its role in offering investors a safety net in times of stress is going to be severely tested over the next few years as central banks tighten monetary policy. It is during these times when a braver and broader approach is required, by going on the offensive in fixed income. By taking on more risk (relative to benchmark), and adopting a truly global fixed income opportunity set, investors are giving themselves tools that can help mitigate duration-led losses in their fixed income portfolios. - Joran Laird, T. Rowe Price. Earn 0.50 CE/CPD hrs on Portfolio Construction Forum

The game has changed - the 2010s is the wrong analogue for the 2020s, a time when major transformations will lead to more investment in technology, broader sharing of income, and greater greening of the world economy than we have ever seen. It will likely lead to higher growth potential, supporting investments in equities, credit, private assets, and real estate. At the same time, core bonds in many areas have already significantly repriced and are set to play an important defensive role in what is a fast-moving cycle. So, DIG in for an important era, when stakeholder capitalism displaces shareholder capitalism and becomes the main route to boosting shareholder value. - Tony Crescenzi, PIMCO. Earn 0.50 CE/CPD hrs on Portfolio Construction Forum

Historically, sitting on the fence has implied indecisiveness. But can a high conviction view be a lack of conviction? Investors may be facing a regime shift in markets that changes the traditional relationship between growth and defensive allocations. In a low conviction world, an allocation to a blend of public and private credit makes sense. It allows investors to sit on the fence, retaining flexibility through a period of heightened uncertainty while still generating an acceptable return. - Pete Robinson, CIP Asset Management. Earn 0.50 CE/CPD hrs on Portfolio Construction Forum

Another JREP (Japan Real Estate Experts Panel) session - we talk delivery lockers & other tenant/short term stay guest perks, business niches, and receive a mini-masterclass on interest rates for home loans!

In today's world, a dedicated allocation to EM Debt is even more importantEpisode Description = The Russian invasion of Ukraine is rattling global financial markets. Part of Russia's capital structure has become uninvestable and Eastern European assets have had significant sell offs despite their balance sheet fundamentals being significantly better. The outlook is positive for many emerging market economies, as growth continues to rebound. Indeed, in 2022, emerging markets are poised to outperform the developed world, as Western policymakers tighten monetary policy and withdraw fiscal stimulus. From an investment perspective, emerging market debt is under-owned, and portfolios should be reallocated to those parts of the world that are beneficiaries of this type of macroeconomic backdrop. - Arif Joshi, Lazard Asset Management on Portfolio Construction Forum

What are fixed interest rates and what does it mean to us?

In this episode, Benjamin Hor, market research analyst of CoinGecko is joined by Teddy Woodward, co-founder and CEO of Notional Finance. Benjamin interviewed Teddy on the mechanism of Notional Finance, key differences that makes them unique, the importance of their governance token NOTE, as well as their future plans in 2022.[00:00:36] Intro[00:01:35] What is Notional Finance?[00:02:03] How does Notional ensure that it achieves fixed interest rates?[00:04:20] More about Notional Finance V2 [00:07:33] Interesting statistics and data about Notional[00:08:48] Key differences between Notional and other competitors?[00:12:25] Why are fixed interest rates important?[00:14:17] The market size for fixed interest rate space[00:16:00] Thoughts on the sophisticated financial instruments in crypto[00:17:30] The importance and utility of governance tokens[00:20:50] Advantages and disadvantages of Notional[00:22:55] The future of DeFi lending products[00:24:55] Notional's plans for the end of the year and 2022Quotes from the episode:“Notional is a decentralized protocol built on Ethereum that enables users to borrow and lend crypto assets at fixed rates of interest.” [00:01:44]“Most of the newer fixed rate protocols stuff like you know, Pendle or Element, these focus exclusively on lenders. So they allow people to lend their crypto at a fixed rate and they don't allow people to borrow crypto at a fixed rate. And so like on Notional of course we allow you to do both.” [00:09:30]“I think once you lower transaction fees, you're going to see just like a ton of new users come in. So I think layer twos are going to be critically important.” [00:23:35]Watch the Podcast on YouTubeLinksNotional Finance - https://notional.finance/CoinGecko - https://www.coingecko.com/Social MediaNotional Finance:https://twitter.com/notionalfinanceCoinGecko:https://twitter.com/coingeckohttps://t.me/coingecko

A conversation between Philip Bailey and Steve Williams of  Assetfirst's investment committee, as they consider the influence of world conditions on their model portfolios. Coming this month:-Aftershock - As supply chain disruption and soaring energy prices hit the economy, are these conditions here to stay?Stagflation - Low growth and high inflation; is the economy heading for the worst of both worlds?Short and (not too) Sharp - The outlook for interest rates.Expansion Phase - Investment strategies for a post covid worldIf you have any comments or queries, please get in touch at pbailey@assetfirst.co.uk

Steven Pritchard focuses on the fixed interest market.

This year, interest rates in most developed economies fell to zero, and in some cases, below zero. In this Market Matters Podcast, Ameer Amod, Head of Absolute and Fixed Interest at Old Mutual Multi-Managers, discusses the interest rate trajectory over the course of 2020 and how this has affected the bond market. He also looks at why it's imperative to take a long-term view when it comes to investing and what the outlook for the future could be. For more information visit www.ommultimanagers.co.za

In day 7 of the Fit Finance Advent Advice special podcasts, the Financial Planners at Efficient Portfolio explain what fixed interest bonds are and the things to consider about them.

Pandemics, money printing and property pricesCOVID-19 has once exposed to the frailties and inaccuracies of forecasting and long-term economic assumptions. Yet for regular readers of his column, Christopher Joye, of Coolabah Capital stands out as one of the few experts with a knack for understanding the quickly evolving conditions and how they will impact both investors and the economy. In this session Chris will cover everything from how his many years in studying bond prices supported accurate predictions of COVID-19 infections and how this can be applied to both property prices and investments markets. We will discuss the evolution of monetary and fiscal policy in Australia and what this means as investors in 2020 and beyond.General Advice Disclosure: This podcast is General Advice only. We have not considered investors personal or individual circumstances. All listeners should seek professional advice before acting on any recommendation.

Heightened equity market risk and negative yielding fixed income securities leaves only hard asset allocation decisions. For investors needing more from their fixed income allocation, global convertible bonds can offer upside that is simply not available in developed sovereign or credit markets. Australian investors have historically underutilised this asset class that can optimise portfolio efficiency and bring powerful diversification benefits. As an instrument, global convertible bonds are balanced with both equity and bond characteristics, offer a specific risk/return profile thanks to their convexity and give an asymmetric pay-off. Global convertible bonds offer a whole new world of opportunity. - Arnaud Brillois, Lazard Asset Management. Earn 0.50 CE/CPD hrs on Portfolio Construction Forum

ESG fixed income investing is not enough - impact investing is far more compelling. The distinction between impact and ESG fixed income investing is important to understand fully. While ESG investing is the inclusion of environmental, social and governance considerations alongside traditional financial analysis, there is no guarantee that ESG funds have a positive environmental or social impact. Impact fixed income, on the other hand, requires investing in bonds that have a measurable, positive environmental and/or social outcome without compromising financial returns. Crucially, impact investing includes measurement and reporting that ensures investors fully understand not only the financial return from the projects invested in, but also their environmental and social metrics to which ensures an accurate representation of the overall fixed income portfolio's impact. Unlike ESG investing, impact investing accelerates the allocation of capital to solve the world's climate and social challenges, and tangibly quantifies the benefits provided from a single investor's portfolio. - Stephen Fitzgerald, Affirmative Investment Management. Earn 0.50 CE/CPD hrs on Portfolio Construction Forum

In this episode, Dr Laura Ryan, Head of Research at Ardea joins us to discuss fixed interest and specifically whether duration strategies can still provide diversification in portfolios in the current ultra-low interest rate environment.

In this episode, Marlena Lee, Head of Investment Solutions at Dimensional joins us to discuss the role that environment, social and governance (ESG) investing can play when building a fixed interest portfolio and why investors shouldn't have to sacrifice returns to meet their ethical objectives. Marlena also shares her views on how the markets might react to the upcoming US Presidential election.

Welcome to Finance and Fury. This episode – be looking at one of the simplest ways to potentially generate alpha and outperform the broader market It’s been a decade since financial markets have become increasingly centrally-planned by central banks and with this - disconnected from fundamentals Hence – traditional analysis of shares based around their fundamentals may not provide outperformance – however – I think it is still important to understand which are good companies to buy into Looking at fundamentals and understanding these and their implications in the broader sense can be hard – takes many years to learn But what if there is an even simpler strategy to beat the market and generate alpha? That is where there is one interesting strategy from some quants – released an article called "Can quants make money by tracking the Fed books?" Runs through trading alongside the Fed's balance sheet – as this seems to be the dominant price setter in markets Been talking about this emergence in a few episodes recently – but interesting that some quant traders are now implementing this Looking at the influence the Fed has had on share prices - Monetary policy has the ability to influence asset prices – a lot of evidence that low interest rates and accompanying expansionary in monetary supply creates rallies in assets with risk - monetary contractions can create market retreats   been more obvious since the GFC - market reactions appear to have become increasingly aligned and dependent on central bank actions – especially that of the Fed This is in part due to policies such as QE – as well as forward guidance from CBs – with statements like to the effect of supporting markets by any means necessary – increasing speculation and the dive head first into those assets that will be supported In 2008 – the total assets on the Fed balance sheet have expanded from $2.3tn to about $7tn today – this is a growth rate of over 200% Over the same time - S&P 500 rose from 900 to about 3,300 -growth of about 270% Over the shorter term – this year specifically – From March the Fed was sitting on about $4.7tn and this has grown to the previously mentioned $7tn figure – a growth of about 48% the S&P 500 over the same period has returned about 42% There is definitely a correlation here – but there is likely a causal relationship as well due to the flow of money into the markets that comes with the Feds balance sheet expanding – injecting liquidity as they would call it But how predictable are asset returns based on prior Fed action and can this be used as a tool to outperform the market? Technically – Fed policies have to be transparent – hence they can be market-moving – if traders are paying attention – so there is likely a first mover advantage here – Looking at what the quants wrote as their trading strategy – or what they are looking at - simply following the Fed They first go through the observation of the correlated movements between markets and the balance sheet of the Fed – have many charts showing the relationship between the growth of the Fed balance sheet and a variety of risk assets They note that the sheer scale of unconventional monetary policy does seem to have also made asset returns more predictable, and performance appears increasingly contingent on central bank actions. This provides a potential opportunity for investors. Fed has committed to maintain its asset purchase programmes “at least at the current pace to sustain smooth market functioning”, and with ultra-low rates expected to at least until 2023, according to the Fed, it is clear these unconventional monetary policies are going to remain a key driver of markets for some time. The quants note introduces a simple tactical alpha strategy that uses the growth of the Fed balance sheet to measure the degree to which monetary expansion is supporting risk-asset rallies The strategy - implemented in the context of the classic long-only equity/cash decision (buying and selling shares) – “provides supportive evidence of market predictability and the potential to utilize measures of unconventional monetary policies in designing systematic strategies” This means that to outperform the market – you can follow the growth of the feds balance sheet – as they note based around their simulations – doing so “generates a sizable outperformance with a reasonable success rate" Important to point out that this model is illustrative - provides a framework to extend to analogous risk -on/-off They did run some observations on if the relationship between the Fed causal beyond what is correlated – presented the correlation of weekly growth in total Fed balance sheet assets with lagged and subsequent returns of the S&P 500 index – what they found: “The negative correlation between lagged stock market performance and current growth in Fed assets (left-hand chart) means that stock market declines increase the likelihood of Fed action in the form of balance sheet expansion. On the other hand, the positive correlation between subsequent stock market performance and current Fed asset growth means that Fed balance sheet expansion leads to positive stock market performance. The impact of Fed asset growth on equity markets lasts, on average, for the subsequent four weeks.” “Consistent with economic priors, balance sheet expansion leads to stronger positive market returns, and our analysis shows that this lasts for up to four weeks, following the policy change, with a peak observed at three weeks. On the other hand, and contrary to expectations, Fed balance sheet contractions are also followed, on average, by market rebounds, although the strength of these correlations were much weaker in the initial three weeks, with a stronger bounce on the four-week mark.” So there appears to be a small announcement effect initially – but then the market reaction appears gradual – peaking at the 4 week mark Could be for a number of reasons – information delay – through to it taking 4 weeks for the liquidity to hit equities – through the purchases being in the Fixed Interest markets and for those on the secondary market to turn around and use the funds to buy shares – or it could be the impact on the lowering costs of capital for companies pushing up the valuations – whatever the reason – there is a lag   Can these observations be traded – this isn’t advice – but general in nature – based around what the evidence shows The Quants design of investment strategy considers the distinctive lead-lag correlations between Fed expansion and Fed contraction – so they designed a weekly tactical alpha strategy based on Fed asset growth that aims to boost investment returns by selectively overweighting riskier assets during Fed monetary expansion regimes. To that end, the quants used weekly Fed balance sheet data over the period of 2009 and Sep. 2020 – a period of intensive use of unconventional monetary policy tools The strategy consists of using a classic equity-cash allocation with the goal of generating excess returns by systematically tilting towards risk opportunistically following expansionary monetary policy In the illustration – they used a long-only portfolio with a strategic allocation of 75/25 between equity and cash – their evidence showed that the impact of Fed asset growth lasts on average for four weeks with the lead-lag correlation to cumulative S&P returns peaking at around the fourth week. The input to the strategy is the weekly growth rate in the Fed total assets, and the strategy seeks to allocate more to equities (from safe asset holdings) during periods of monetary easing as reflected in the growth in Fed assets. the performance of this simple tactical tilting strategy shows that they would have been able to provide annualized excess returns of 2.5% So based around these models – it appears to work – can it continue working? If it is implemented correctly – and assuming that the causal relationship is due to the spill over effects from programs like QE or corporate bond purchases But there is no denying that the Feds movements do now move markets – the quant strategy implemented in the context of a long-only equity/cash portfolio provides some evidence of the potential to utilize the Fed as a partner in generating returns – if they are going to expand the money supply and this is going to flow into risk assets – like shares – why not follow? The Quant simulation generates a sizable outperformance with a reasonable success rate What else should we expect in the financial world where trillions of additional dollars from the expands of the Fed balance sheet have the ability to flow into shares once they are loosed into financial markets This being said - the Fed balance sheet-tracking strategy probably shouldn’t be the sole investment strategy that people use – Important to remember goals and look at your own risk tolerances and the point of investing But it could be useful as an overlay - given the massive numbers of other factors that affect markets and their performances - the Fed balance sheet strategy could also be blended with other trading decisions Thank you for listening to today's episode. If you want to get in contact you can do so here: http://financeandfury.com.au/contact/

Brett Hall checks the current situation with fixed interest.

A conversation between Philip Bailey and Steve Williams Assetfirst investment committee, as they consider the influence of world conditions to their model portfolios. Coming this month:-A justified recovery? - Stock markets have recovered strongly in in recent weeks, despite warnings of e deepening recession. Are markets overly optimistic?Trouble ahead? - As central banks continue to pump money into the markets, are inflation and higher interest rates just around the corner?Property Outlook - Has the Pandemic marked the a fundamental change to the asset class?Far from Fixed - A glimpse at our asset allocation thoughts for the post pandemic world. If you have any comments or queries, please get in touch at pbailey@assetfirst.co.uk

Welcome to Finance and Fury, the Say What Wednesday edition. This weeks question comes from David.   David says: We have seen some ASX fixed income Listed Investment Trust (LIT) have fallen 10-30% from their NTA. Are you able to do a series to cover those to see if it is now a good investment opportunity? My thinking is that the massive drop is a function of retail investor fear (they don’t know what they are invested in) rather than the decline in the actual value of the investment.   Great question and we will look at some of the ones David sent through - NBI, PGG or KKC   important to note – not all fixed income is made equally What is fixed income/interest? A Fixed Interest is a debt instrument - a form of lending. Financial Product designed to raise money for the entity that issues the bond I liken it to an interest only loan – You need money? You borrow morning with the mortgage as the product and pay interest back When a company or Government needs money – Someone (you) purchase that bond – Essentially loaning money to the issuer when then pays you interest At the Bond Maturity – you get the initial loan back (unlike a PI loan) LITs or ASX listed products – most of these are companies that are active managers of fixed interest – Similar to a LIC or ETF – the hold number of FI investments that make up the product For LITs – The price they trade is the price for demand for the investments themselves – Doesn’t always relate to the NTA value – or underlying investment values that the company holds – These LITs like NBI, PGG or KKC Buy and sell other companies debt Buy it off someone else who bought it – secondary market – trade to make a profit In most cases though, active bond managers tend to not hold FI to maturity to try and keep a longer term duration. As they sell these on the secondary market however, the funds invested aren't lost (even though the sale occurs before maturity) as someone else will buy this off them. Costs - It can be pretty expensive for the given returns (which are likely being represented after the MER) but they do at least provide capital protection on an investment without getting cash like returns. Index bonds – Cheap 0.1% Active – can be expensive, similar to a share managers costs – some of these charge around 0.8% MERs   First- the FI assets themselves Why do they exist? Like People, Governments (Fed, State, etc)/companies need to fund their expenses with debt Create a product (bond) – Sell it to someone else – get the money and pay a yield on the amount to the purchaser Issuer – Sets a Face Value – how much they want and how much they will pay Purchaser – transfers money to them and gets paid coupons – similar to interest you pay in loan Price – Price = FV at issue – as coupon rates are priced in based around interest rates Purchaser – Can hold the bond and get income, or sell it on the secondary market If you buy fixed income/interest on the secondary market, it essentially works the same as if you bought it on the primary, except the maturity date is closer (so if you held you would get the face value back) you get it at a different price to the Face Value (due to interest and coupon payments being different in most cases) can go above – interest rates drop compared to coupon yield Below – interest rates goes up compared to coupon yield Types of FI – and the risks attached - Meant to be safe/defensive – whole point of diversifying but corporate bonds are correlated to the shares What is the type of debt instrument and who is the issuer – Government Bonds – Either safe or not – depends on country Types of Bonds – Who needs to raise money?- As of 2017, the size of the worldwide FI market (total debt outstanding) is estimated at $100.13trn – a lot of which is corporate How you tell – Ratings system S&P and Moodys – AAA = High quality – BB to D = Junk Watch out – can be fooled – MBS was considered AAA – which are a large component of FI as well What is the maturity – Long maturity leaves you open to interest rate risk Duration – measurement of sensitivity to interest rate movements 1 = $1 change in 1% interest 7 - $7 change for 1% interest Based around the time until maturity of bond Interest rate movements crease bond movements Tend to look for one about 5-7 duration, and another with -2 duration (can hold cash and loans) One safe gov bonds, other takes a punt on under-priced debt (risk of default lower than price shows) – Major issue with a lot of FI investments now – Interest rates are low to zero – so risk of price losses from rising interest rates have increased – Most important one right now – that a lot of companies may go out of business and default on their FI products At the moment – not a lot of Gov Bonds have dropped much in value – defaults risks have gone up but still not as high as corporate – Corporate debt has dropped in valuation though – as with the shut downs and the fact a lot of companies have issued out massive FI amounts over the past decade – lots of debt they may not be able to repay   But as David pointed out – the prices for the LIT investments have dropped more than the NTA of their underlying investments Whilst LITs act like shares – managers buy and sell debt – two types of assets, equity and debt (only if you own it Debt is traded like a share – but then these LITs are also traded as a share – so have the double downside risk when people panic sell – As david said - massive drop is a function of retail investor fear (they don’t know what they are invested in) rather than the decline in the actual value of the investment - Yes and no – The large drop is out of retail fear – but the quality of investment isn’t great – so the drop is technically justified Issues that a lot of these FI managers face - Fixed income is debt instruments – types – Government, SemiGov – or corporate debt Most of these LITs have corporate debt – so the risk of defaults is going up and the NTAs are slow to be updated in some cases - Type of FI matters – as the risk of default is important – But also – the legislation changes that mean that the reporting requirements to markets isnt currently in place and also that creditors or debt holders can not be repaid for a time if the company is in trouble Quality of credit as well – this is what really matters If the company doesn’t have to report to the market – like in the ASX – important information is Duration – how sensitive they are to interest rate changes   Have a look at the individual investments Prices – Dropped massively from the initial crash – 21-Feb to their bottoms in 23 March – Which is when the government and monetary responses started kicking in – rebound of 20%-50% since then in prices – but still below NTA values NBI – NB GLOBAL CORPORATE INCOME TRUST Price was about $2 until the crash – went down to $1 – 50% loss – back to about $1.45 but the NTA is slow to be updated - NTA is now sitting at $1.60 No need to point out that this is a little different – and why the prices came back – but they are still sitting below out of fear – but important to note that the NTA is unaudited estimates – Hazard a guess that it might be slightly off Credit Quality – very low: BB – 40%, B – 44%, CCC or below – 16% - Average credit is B+ - Higher risk and higher yield Hedged to AUD – 55% of holdings in USD – so the NTA shouldn’t have changed in value from currency movement but this would have backfired in recouping any losses   PGG – Partners Group Global Income Fund Price was about $2 until the crash – went down to $1.10 – 50% loss – back to about $1.38 but the NTA is slow to be updated - NTA is now sitting at $1.34 – remember that this NTA is an unaudited estimates – but is closer in line with the actual price Credit Quality – low as well: B   KKC – Credit Income Fund Price was about $2.48 until the crash – went down to $1.45 – 40% loss – back to about $1.58 – small gain Unaudited estimate on NTA is now sitting at $1.98 – was sitting at $2.55 a month ago – so 25% drop – but it is still estimated above the prices – but may not be accurate - Hazard a guess that it might be slightly off – but could have just been a victim in the overall retail sector selloff The majority of the portfolio is focused on more defensive sectors such as Healthcare, Services, Software and Capital Goods which are less exposed to obvious negative impacts from the virus; and has low exposure to the energy and travel/leisure sectors, with no exposure to companies operating airlines or cruise ships. But the unit pricing is still done monthly – so see how the next month plays out   One thing to watch out for – the retail investors selling these LITs might be doing so due to the lack of disclosure and cutting their losses – hard to work out the true NTAs if companies are absolved of their reporting obligations – in environments like this hard to Also – in investment structures like this – they are only as strong as their weakest link – defaults in the lower end of the credit quality can quickly result in redemptions and fund outflows which trigger further losses up the chain – of the whole price of the investment Durations aren’t too bad – usually corporate credit isn’t that high – on average about 4-5   Summary – FI is meant to be in a portfolio if you want downside protection – but a lot of these When is it needed? Why buy? Downside protection – Prices can move, but not by much compared to shares – but also true on the update – For long term growth – and looking for rebound of markets – shares may work better Higher yield than cash – in a lot of cases you get more income Middle ground to cash – better income for some risk – but a lot more risk due to corporate defaults at this stage - Is it a good time to buy? Seemed to have averaged out in prices now and flattened – whilst some are slightly below the unaudited estimates on the NTAs at this stage, this might be for a valid reason – if looking to gain additional growth over long term – FI have a limited upside   Thank you for listening to today's episode. If you want to get in contact you can do so here: http://financeandfury.com.au/contact/

Welcome to Finance and Fury, The Say What Wednesday Edition This week Question from Mark – two-part episode (over this week and next) Hi Louis I have 2 questions, can you explain how negative yielding bonds work, they are saying a third of the global bond market is in negative yielding debt and it is going parabolic. How do people make money from negative yielding debt? It doesn't make sense. Also, can you explain the repo markets that are going on at the moment? Apparently the banks are loaning money from the Feds at 10% so they have enough liquidity to survive the night # Bank run?   How can a bond have a negative yield? Negative-yielding bonds are bonds that cause bondholders to lose money when they mature. This happens when holders of such bonds will end up with less money than what they used to purchase them Negative Yield works through the mechanics of bonds – when the prices go up to where the yield is close to zero – and they are based in a nominal real value $100 – in 10 years’ time inflation eats away at the value   First - Explanation of Fixed Interest (bonds) -  terminology – You don’t get interest payments - you get coupons = The periodic interest payments promised to bond holders are computed as a fixed percentage of the bond’s face value; this percentage is known as the coupon rate. The face value (also known as the par value) of a bond is the price at which the bond is sold to investors when first issued; it is also the price at which the bond is redeemed at maturity.  In the U.S., the face value is usually $1,000 - Face Value is the amount of money you get back in at maturity of the bond Note that the face value is not the price – the price is what someone wants to pay for a bond You cannot receive any coupons and the yield on the bond may be positive – if the nominal value of the bond will rise to give you a return – or yield The maturity is the date at which you get your money back – Bonds are debt instruments – but what they really function as is a way of borrowing funds – funding projects/capital requirements for banks through selling a newly created asset and selling it to investors – in exchange for money – it is a loan that is in the form of an investment which can be traded –   In Current Markets - A yield decline will start to occur if investors are buying a bond for more than its face value How do Negative-Yielding Bonds Work? - To understand negative-yielding bonds, let’s first examine how regular bonds work to see how money can be lost on them at maturity - then how it differs from bonds that lose money. Two main categories for regular bonds: coupon and non-coupon paying bonds Normally - an investor should ordinarily end up with more than what they paid for the bond If there is no income (coupons) – price of bond should be at a large discount to maturity FV I.e. – Bond matures in 3 years for $100 – buy today at $90 – YTM = 3.5% p.a. even without coupons Very simple to calculate the Price of a Bond – literally a formula to get the exact price based around a few variables – A bonds price is that of the present value of all coupon payments plus the face value paid at maturity. F = face value, C = coupon payment, N = number of payments, i = market interest rate, or required yield, M = value at maturity, usually equals F This formula shows that the price of a bond is the present value of its promised cash flows.  As an example, suppose that a bond has a face value of $1,000, a coupon rate of 4% and a maturity of 30 years.  The bond makes annual coupon payments every year – 30 payments -  If the interest rate is 4% Price = $1000 = same as FV – interest rates and coupons same – so no discount in price or premium of price What happens if the interest rate drops? Same bond – but interest rates now drop to -1% - price is now $2,760 – paying Each year the investor receives $40 in coupon payments and when the bond matures, they receive $1000 at maturity - though the investor paid more - yearly coupon payments made up for the difference of holding in cash with negative interest rates - But now let's say that the same bond sold for the same amount – but wasn’t paying coupons? They get a negative yield (return) on their bond Prices and Yield to maturity – Can lead to negative yields – another simple example - Maturity: 3 years, FV: $1,000, Coupon: 0% Price: $1,050 During the three years, you get no income payments and when the bond matures you only get $1,000 back – Loss of $50 over the 3 years works out to be about a negative yield of 1.6% Therefore - If the total amount of income the bond pays over its remaining lifetime is less than the premium the investor paid for the bond, the investor loses money and the bond is considered to have a negative yield. With QE going on 10 years now – there are a lot of bonds being purchased in the secondary market – demand for bonds is high – the price can go up State of bonds: Who Issues and Buys Negative-Yielding Bonds? Negative-yielding debt is not new in Europe and Japan - issued by governments   Japan - the interest rate set is below 0% - so with negative interest rate the central bank charges banks for keeping deposits – which is passed on to consumers – Monetary policy that tries to encourage banks to lend out money and stimulate the economy The same strategy has been used by the European Central Bank. Therefore - As countries put in negative interest rates - government bonds are created that have negative yields – or below zero returns – Why would anyone buy them? Banks still purchase these bonds as they have good liquidity and there are a few options safer than a government bond. Also – the more fixed-income securities become negative-yielding, the yields offered by bonds will continue to enter the negative territory - so investors buy bonds with negative yields because they believe future bonds will offer even worse returns – speculation to buy now to not get charged negative interest rates and to not lose more money in future if newly created bonds have worse returns Number of bonds with negative yields are starting to reduce The stock of Euro-zone government bonds with a negative yield on Tradeweb ballooned to around 5.61 trillion euros ($6.2 trln), or almost 69% of the total market, in August. It has since eased to around 5 trillion euros or 62%, according to data from the electronic trading platform. Globally, the pile of negative-yield bonds including corporate debt has shrunk to around $12.5 trillion from a record high around $17 trillion just two months ago. Indeed, this week France’s 10-year bond yield turned positive for the first time since July FR10YT=RR and the entire yield curve in Germany — the euro zone’s benchmark issuer — is no longer negative as it was a month ago. But for many bond investors, it is still early days.   Part 2 of the question - Repo markets – A repurchase agreement, also known as a repo, RP, or sale and repurchase agreement, is a form of short-term borrowing, mainly in government securities. The dealer sells the underlying security to investors and buys them back shortly afterwards, usually the following day, at a slightly higher price – This is a pretty heavy topic – lots of parts to unpack - so part 2 will be next week Thanks for listening to today's episode. If you want to get in contact you can do so here: http://financeandfury.com.au/contact/

Episode three hears the Assetfirst investment committee consider political and economic influences to their model portfolios. Coming this month:-They think its all over - A General Election has finally been called and Sterling goes from strength to strength. What does this mean for equities? Are we ready for ESG Funds - ESG choices are gathering pace. Are they yet a viable tool to construct risk graded portfolios?Ways to skin a cat - We discuss the merits of overseas assets in defensive portfoliosUnderweight South Africa - Our aspirational approach to the Rugby world cup. If you have any comments or queries, please get in touch at pbailey@assetfirst.co.uk

Coronation Fund Managers — In this episode, Portfolio Manager Mauro Longano talks about South African and global expectations around monetary policy direction, the drivers behind the outlook for the South African economy and what to expect from local fixed interest asset classes going forward. Episode disclaimer - SA listeners · Episode disclaimer - Global (ex US) listeners · Episode disclaimer - US listeners

There’s more to fixed interest than bank term deposits Luke Smith joined Richard Perno on Radio Station 2CC Talking Canberra 1206AM. The Money Show aired on Friday 29 March 2019. Luke and Richard caught up on the topic of fixed interest. Within a low interest rate environment, fixed interest might not provide the returns that … Luke on 2CC – Fixed Interest Options Read More »

In this episode, we go over the differences between fixed or variable interest rates and when one may be better than the other.

Welcome to Finance & Fury, the ‘Say What Wednesday’ edition. This week’s question comes from Gab; “Hi Louis, I was looking at different asset classes and how someone could get exposure to them (outside superannuation) and got stuck on "fixed income". If I understand this asset class correctly, if you hold to maturity you get all the capital back. But if you buy ETFs or managed funds you lose this benefit (as you basically just get exposure to the secondary market). Also, I thought the fees were ridiculous, especially with active managers charging 0.5%, when the long-term return is 5-6%. What are your thoughts on this? Thanks, Gab (keep up the good work!)" Hi Gab, Great question!   Today we’ll focus on explaining Fixed Interest in straightforward terms; What are Bonds, why do they exist, and how do they work? Price, ‘Face Value’ and coupon rate Buying and selling bonds The effects of interest rates on the value of bonds Bond managers – Managed funds or ETFs The role of Bond Managers Costs compared to returns Index bonds Active managers Why buy bonds or other fixed interest assets? Downside protection Higher yield than cash Middle ground to cash The risks and disadvantages Ratings system Maturity Duration Interest rate movements What I look for when buying bonds Franking credits on coupons   If you have a question, or want us to cover something else in more depth, let us know at the contact page https://financeandfury.com.au/contact/. Thanks again for listening guys. Until next time!

Coronation Fund Managers — In this episode, Kirshni Totaram, global head of institutional business, is joined by head of fixed interest Nishan Maharaj to talk about the prospects for SA fixed interest in 2019. Episode disclaimer - SA listeners · Episode disclaimer - Global (ex US) listeners · Episode disclaimer - US listeners

Join Nucleus Wealth's Head of Investment Damien Klassen and Tim Fuller as we discuss all things bonds, where they fit in the investment landscape and why they are an important part of any diversified portfolio.The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Damien Klassen and Tim Fuller are an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Integrity Private Wealth Pty Ltd, AFSL 436298.

Tune into our latest Fixed Interest podcast with Brian Coulton, Chief Economist and Tony Stringer, COO, Global Sovereigns Group, who discuss what's in store for the global economy in 2019. For more content providing in-depth insight into credit in 2019, including reports, videos and webinars visit our dedicated Credit Outlook page https://your.fitchratings.com/outlooks-2019.html

Steven Pritchard discusses fixed interest bonds with Richard Murphy, CEO of the Australian Bond Company, and brings us a market update.

Today’s Say What Wednesday question is from Linus. Linus asks, ‘I was just wondering what you think the ideal weighting of Australian (ASX200) ETFs, similar international ETFs and Bonds is in an investment portfolio? Love the show, thanks.’ There’re a few things to cover off here! The ideal weighting of Asset allocations; that is, how much you have allocated to Australian Shares, to International shares, to Bonds, etc.   To determine the ideal weighting there are 3 questions that need to be asked: What is the purpose of the investment portfolio? What are you trying to achieve? Long term growth – Trying to maximise the balance Short term stability – Well diversified portfolio with low exposure to growth Drawing an income or reinvesting – which determines the type of investment held How much time do you have? Longer timeframes allow for more planning and take advantage of long term growth How much risk do you need? Returns come in two parts = Income + Growth If there is growth in the equation, the investment can lose value – this is where risk comes in. But, it can also help long term. Portfolio construction – What you need to know Which asset classes you need? How much should you allocate to each of these asset classes? Which investments should you choose within each asset class? No. 1. Asset Classes Selecting the correct mix of Income and Growth Five main asset classes – the core to most portfolios (doesn’t include direct property) Each has their own purpose For example, if you need to draw a consistent income, you won’t want much volatility Defensive (No growth) – Low chance of capital loss, don’t increase or decrease in value over time Cash – earns interest Fixed Interest – receives coupon payments (receive the Face Value back at the maturity) Growth – Has chance of capital loss (riskier) Australian Shares – Dividends and Price gains (generally higher dividends than International shares) International Shares – Dividends and Price gains Listed Property and Infrastructure – Dividends and Price gains No.2 Risk profile To determine the allocation to each class, you need to determine your capacity to deal with risk. The traditional way - Risk Profiles (which provides an outline but is not a perfect science). These help to get an idea about how much growth is acceptable. High Growth – 100% to Growth investments like shares and property – Longer term 8+ years Growth – 80% to growth – Longer Term – 7+ years Cash, Fixed Interest of 20% Balanced – 65% to growth – Min timeframe of about 6 years Cash, Fixed Interest of 35% Conservative – 50% growth Cash, Fixed Interest of 50% Defensive – 30% growth – Good to minimise volatility, shorter term investments or those from which you’re drawing an income Cash, Fixed Interest of 70% No.3 Selecting the investments within each asset class Defensive Generally for either income or capital protection Cash – How much income do you need? Do you have a need for reserves? Fixed Interest – Australian or International. Credit, Alternatives, or Bonds Higher risk (e.g. Corporate debt) - higher yields Growth Australian Shares – Market caps – Selecting a good weighting between asset classes ASX200 – Large Cap allocation Small cap ETFs – Issue is when they are passive International Shares – different countries and market cap  Balancing your desired return with how much risk (volatility) you can afford Risk - Volatility - Potential movements in price around a mean average High potential for movements, considered higher risk Speculative risk - Can become absolute risk (i.e. losing everything) but can be avoided through proper diversification (which is the whole point of asset allocation) Returns - The higher the levels of volatility, the higher the expected return should be Risk-return relationship – Less invested in assets that can lose value, lower the allocation to assets that don’t grow in value If something can’t gain value, it is harder for it to lose value Back to Linus’ question: Ideal Weighting / Perfect allocation What is the purpose, timeframe and return needed? Example #1 – purpose is to invest for the long term to maximise wealth, investing every few months You are tolerant to risk (not spooked out by volatility) and have about 20+ years to invest, plus you’re going to make ongoing investments Allocation – Growth to high growth may be appropriate. For example, 0-20% Fixed interest (cash can be minimised) Allocation: 20% to FI, 20% to LargeCap Aus shares, 10% to MidCap Aus shares, 10% to Smallcap Aus shares, 20% to LargeCap International shares, 10% to Emerging Market International shares, 10% to Infrastructure What this is looking to achieve – Large long-term returns, leverage volatility to take advantage of ongoing investments, have best chance of maximising the balance Example #2 – Purpose is to invest to generate a passive income with minimal volatility Pretty scared about volatility, you want to achieve a better income return than your cash, but don’t want to see portfolio drop more than 15% Allocation – Conservative – Over 50% Defensive (depending on timeframes) Allocation: 20% to Aus Fixed Interest, 30% to Int Fixed Interest, 15% cash, 30% to Aus shares – mostly large cap, 15% to International shares – again, mostly large cap What this is looking to achieve – Greater return than cash, likely to not drop below 15% loss overall Conclusion – First just ask what the purpose of the investment is What you will need out of the investment? Growth, stability, income? – Determines the Income/Growth Relationship What investment mix will achieve this? i.e. how much to growth or defensive (Risk profiles) Long term high growth – Greater amounts to growth investments Capital stability – More in to investments that don’t lose much in value historically What allocation within each asset class is needed? Fixed Interest – High yield or safe AAA rated bonds Shares – Emerging markets or allocation to smaller cap allocations Does this suit my risk tolerance? Yes – Good allocation No – Do I need to accept the additional risk? There’s more than one way to skin a cat Thanks for the question Linus! To ask a question head to https://financeandfury.com.au/contact/  

Today’s episode stems from the question last week from William about investment bonds (an investment vehicle, kinda like a life insurance product). Today however, we’re talking about the asset class of Bonds   What are bonds? A bond is a debt instrument - a form of lending. Part of the ‘Fixed Interest’ asset class (ever seen a multi sector asset allocation, like inside a Super Fund) Financial Product designed to raise money for the entity that issues the bond I liken it to an interest only loan – If you need money, you borrow it (like a mortgage) which you pay back along with interest too. When a company or the Government needs money, someone (you) purchase that bond – Essentially loaning money to the issuer who then pays you interest (coupons) At the Bond Maturity – you get the initial loan back (unlike a PI loan)   Basic Terms Face value: This is the nominal value of the bond, typically $100. It also refers to the principal lent to the bond issuer which they commit to repay to investors when the bond matures. NOTE: This is not the price – but we’ll come back to this a bit later Coupon rate: The annual interest paid to the investor and is calculated as a percentage of the face value. 5% Rate = $5 p.a. on a $100 FV bond, or $50 on a $1,000 FV bond 6% rate = $2.6 on a $100FV Maturity date: This is the date the bonds effectively expires and final payments are made to investors. These payments include the initial loan and the final coupon   Types of Bonds – Who needs to raise money? Government 1988 to 2008: $50-100bn on issue Since 2008 has risen - $500bn Corporate – Since 2000 gone crazy - $200bn to $1.1 trillion Total Market Size = $1.8 trillion – About the size of the ASX300 on any given day     Designed to be a defensive asset Due to the fixed rate nature of a bond and lower level of risk they carry in general, bonds are considered a defensive asset. They are debt – but creditors are paid back before equity holders If a company defaults they will pay back the debt holders first before share holders The Risks - risk does lie is in the chance of the bond issuer defaulting on the loan The levels of risk vary – e.g. The Australian Government is safer than a small mining company Typically, government is considered safe compared to corporate Unless government is Greece and are at risk of defaulting on debt   Where the bond is being bought is also a factor. That is, the Primary or Secondary market Primary - Buying bond directly from issuer - When a bond is first issued you can purchase it directly from the company Price here will be the Face Value e.g. $100 FV = $100 price Secondary - afterwards, they are listed on the secondary market where investors can buy and sell their bonds. Price – Remember the Face Value, it is not the price once it has been listed on the secondary market Face value of a bond remains fixed for its lifetime Price/value of the bond fluctuates due to changes in market conditions, particularly changes in interest rates Mechanics Interest rates – Given that bonds are debt, they are related in pricing to interest rates Interest rates rise – Bond price goes down Interest rates fall – Bond price goes up Negative correlation with Interest rates Example: FV of $100 on a bond Bond has a coupon rate of 5% and the interest rate in the economy is 5% The Price = Face Value at $100 – That is due to interest and coupon being the same Falling interest – Interest rates go to 3% - Bond price might go to $108 from $100 Bond is more attractive now – Better coupon than cash – the value of it is better now Rising interest – Interest rates go to 7% - Bond price might be $92 from $100 The bond will be less attractive as it is slightly riskier than cash, so the price will go down as why by a bond when you can get 2% extra in cash?   How much will the price change when interest rates change?   This is based on Duration: How sensitive a bond will be to interest rate changes? Measured by technical term called duration – slightly confusing as it is based around time to maturity, but isn’t the only factor: The duration is based on the time until maturity – Longer duration more sensitive to changes in price Rough rule of thumb – Per number in the duration = 1% interest change = 1% price change Duration of 5 = 5% price change for every 1% interest rate change Duration of 20 = 20% change in price When is higher duration better? When interest rates are expected to drop – As the rise in bond prices will be greater Long duration bonds are typically shunned if rates are going to rise   Where Bonds Fit in? Typically form a defensive component of a portfolio Depending on tolerance to risk (Volatility) – They can be good Uncorrelated asset – Performs in opposite direction to shares/property Shares Crash (2008) then bonds typically rise   The negative aspects of bonds No growth to offset inflation Can get inflation linked bonds – But they still may fail outpace the traditional growth investments over the long term AUD gov bonds pay about a 2.6% yield – almost the same as term deposit rates 30-year bond – Face value of $100 in 30 years is worth about $48 with inflation of 2.5%.   Summary Bonds are a debt instrument (Fixed Interest) Defensive – or as defensive as who issues them Buy someone’s debt and get interest (called coupon payments) for loaning them money They have their time and place – Stable income returners, provide capital protection

In this episode of Investing Insights with Right Property Group, one man down, Phil, Steve and Victor answer the questions listeners have asked this year. They cover topics on supply and demand, rent correction, fixed interest rates and how a buyer’s agent can help improve your portfolio. Did you like this episode? Show your support by rating us on iTunes (Investing Insights) and by liking and following Right Property Group and Smart Property Investment on social media: Facebook, Twitter and LinkedIn. If you have any questions about what you heard today or any topics of interest you have in mind, feel free to email editor@smartpropertyinvestment.com.au or questions@rightpropertygroup.com.au for more. www.smartpropertyinvestment.com.au www.rightpropertygroup.com.au

The Mortgage Business Uncut podcast is your weekly analysis of the biggest themes shaping the Australian mortgages market. Join Alex Whitlock and Annie Kane as they delve into the latest headlines and developments in the home loan market. This week they discuss… -Police raids involving a multi-million dollar corporate fraud case at NAB -Westpac's new credit policy criteria assessment and the impact it will have on brokers -The continuing fall in demand for fixed interest rates www.mortgagebusiness.com.au

Welcome to the second series of Investing Insights with Right Property Group. Join Right Property Group directors Steve Waters and Victor Kumar as they explore and challenge the strategies, tactics and techniques to create wealth through property investing. Every month, Steve and Victor join co-host Phillip Tarrant from Smart Property Investment to address the burning issues impacting investors, covering key topics such as manufacturing equity, property management, purchasing units versus houses, researching the market, finding under market value properties, the habits and attitudes of successful investors and portfolio building. In this episode of Investing Insights with Right Property Group, Phil, Steve and Victoranswer the questions listeners have asked this year. They cover topics on supply and demand, rent correction, fixed interest rates and how a buyer's agent can help improve your portfolio. Tune in now for the full episode.     CONNECT WITH RIGHT PROPERTY GROUP If you have any questions or would like more details on any of the information discussed on the podcast contact Right Property Group on questions@rightpropertygroup.com.au, visit www.rightpropertygroup.com.au or call 1300 302 166.   We'll be covering all your questions in a coming episode of Investing Insights with Right Property Group, so ensure you get in touch.   If you''re new to this podcast, check out series one on www.smartpropertyinvestment.com.au/podcasts/right-property-group.     FOLLOW RIGHT PROPERTY GROUP Keep connected with the team and all the latest news and activities. You can follow Right Property Group on Twitter or Facebook.

Coronation Fund Managers — In this first episode of our series of investment outlooks, Kirshni Totaram, global head of institutional business, is joined by head of fixed interest, Nishan Maharaj, to talk about the prospects for fixed interest in 2018. Bond outlook - January 2018 - Corospondent · Episode disclaimer - SA listeners · Episode disclaimer - Global (ex US) listeners · Episode disclaimer - US listeners

EON speak to Jonathan Wu from Premium China Funds Management about investing in China.    There is a great deal written and said in the Australian press about China.  Overwhelmingly, the commentary negative.   This surprises me, given the significance of China to our economy.   We sought the views of a professional, with 10 years focused on investing in China, to balance the view. We cover; ·       China as a long-term investment opportunity ·       The much talked about debt levels ·       Ghost cities ·       The target of doubling disposable income by 2020 ·       Lower risk exposure to China through Fixed Interest versus Equities   This is a great episode for all trustees investing their own funds.  The impact of China on the global economy and equity markets will impact returns for decades.  Get the real news on the EON Financial Group SMSF Podcast.   Compound your wisdom!

Description: James McNab is the Manager of Aquasia fixed interest funds. Aquasia manages wholesale funds and syndicates, investing in a range of credit and fixed-income assets. http://www.aquasia.com.au/james-mcnabb

Join Jeremy Reynolds as he discusses Why Fixed Interest Loans Should Now be an Option for your home loan

Steven Pritchard looks at fixed interest investment portfolios with Richard Murphy, CEO and Co-founder, Australian Corporate Bond Company, and brings us a market update with Henry Jennings, from the Marcustoday financial newsletter.

Tax deductability of break cost on fixed interest loan? This was the investor question from S04 E15 of Property Success with Margaret Lomas.

Futuregrowth manages five fixed interest unit trusts for Old Mutual. Each fund serves a very different purpose depending on the needs of the investor. Criteria like risk, volatility, duration and security selection all have an impact on how the portfolio will behave. Candice Paine spoke to Michael van Rensburg, portfolio manager with Futuregrowth Asset Management, to find out when?, why? and how? you distinguish between fixed interest funds.

Futuregrowth manages five fixed interest unit trusts for Old Mutual. Each fund serves a very different purpose depending on the needs of the investor. Criteria like risk, volatility, duration and security selection all have an impact on how the portfolio will behave. Candice Paine spoke to Michael van Rensburg, portfolio manager with Futuregrowth Asset Management, to find out when?, why? and how? you distinguish between fixed interest funds.