Bonds are always lower risk than shares in the same company, but do carry some of the same risks. They also have unique risks that can be used to your advantage.

The conversion of TELYS4 and implications for the wider market.

This year’s ASX Russell long term investing report, which assesses returns on a 10 and 20 year time span up to 31 December 2017, shows some surprising results.

The Aussie iTraxx is a proxy for credit spreads in the Australian market. It is an index, not unlike the ASX All Ordinaries Index for equities, which provides information on the direction and trend of the market.

We have decent supply in a range of retail bonds at the moment. If you have some ‘lazy’ cash available, now might be a good time to consider investing for a higher return. We list 13 bonds with a mix of investment grade and high yield.

Cash is cash on hand – at call – money you or your fund manager can get at immediately. Anything else does not qualify.

Understanding the terms and the return of fixed income securities or interest rate securities as they are frequently named can be confusing. This article provides a guide that should help you to understand some of the different features of the investments and how to interpret the returns quoted, and includes a list of key definitions.

Shareholders have been spoilt by Telstra and big banks in recent years and can be forgiven for thinking the stocks can act like bonds. These shares, often tagged as “bond proxies”, have been consistent and delivered high income with franking credits making them broadly appealing to many investors. But recent history tells us you can’t rely on shares for income or capital preservation and so they should never be thought of as proxies for bonds.

Benchmark interest rates are rising and while it’s still only early days in the banking royal commission, the indiscretions are mounting, as are likely costs. The banks might feel the pinch but ultimately is going to be the customers that have to pay.

CBA recently launched a new bank hybrid hot on the heels of Westpac’s new issue, which has us questioning: are hybrids any better than bank shares? We think both will react similarly in a downturn but hybrids are more complex.

While some of the criteria are similar to those we use for assessing a company for share investments, there are critical differences when assessing it from a bond perspective.

A new calendar year is a good time to take a breather and consider your investment objectives for 2018.

There are four different ways to quote a yield:

A total of 46 of the ASX Top 50 companies issue bonds. This isn’t surprising as they are large international companies trading in foreign markets and require multiple sources of funding (see Table 1). But a couple of things did surprise me:

It’s getting harder and harder to find value in a very tight market. The Australian Itraxx is trading around 68 basis points – that’s a proxy for the average spread over the benchmark for an investment grade bond. It’s not much.

High yield bonds pay high returns for increased chance of volatility and loss, but that doesn’t mean they are ‘junk’. Rather, just like trolling around a second hand shop, you can find some gems, worth more than they seem. Companies may go on to perform strongly and the price of the bond rises as the credit margin contracts, providing investors with higher than expected gains – assuming interest rate expectations remain unchanged.

There’s something innately attractive about property. It’s tangible; it can be beautiful or have cultural, historical or sentimental value. Coupled with attractive negative gearing benefits for high income earners, the asset class has a lot going for it. 

On Monday, the Australian iTraxx – our local proxy for credit spreads – reached a new post GFC low of 71 basis points. Simply, this measure represents an average additional margin that investors expect to be paid for investing in an investment grade bond issue.

Disruptors are coming thick and fast and investors unaware of technological and social changes will be left taking stock of losses, wondering how tried and tested high dividend payers started losing ground to new, more agile technological adopters.

Just now we are hearing many fund managers suggest the sharemarket has become expensive — at the same time cash deposits continue to pay very low returns.

Most of the downgrades applied to regional banks such as AMP, Bank of Queensland, Bendigo and Adelaide Bank, Credit Union Australia and ME Bank.

Airports offer a runway to prosperity through predictable, steady returns

The residential property merry go round is always good, until it stops. Just ask some Perth home owners and investors.

The US Federal Reserve has finally increased interest rates from a range of 0.5 to 0.75 percent to 0.75 to 1.0 percent. It’s a long awaited and relatively significant increase, but looking back to early 2016 it’s taken a lot longer for the Fed to move than most market pundits expected.

After what seems like a break, the popular hybrid note market is back in action.

You don’t have to borrow big or worry about falling prices to invest in property. Property companies issue corporate bonds and they can be a great alternative – here are ten reasons why you might invest in a property bond instead of direct investment with a mortgage

It’s interesting then to consider how some of the bigger institutions are coping with low rates and how they are changing their asset allocations to try and improve returns, while limiting risk. Watching these larger corporations with dedicated research teams and global asset managers, helps identify trends that smaller investors can replicate.

A few years ago Glencore, a diversified multinational commodity trading and mining company, issued a bond in the domestic market for the first time. At that time, the company had a market capitalisation of around $50 billion, and was the nation’s largest coal producer through its Australian subsidiary Glencore Xstrata.

They appear to be mimicking US commentators whose comments relate to US government fixed rate bonds. In that context, I agree there is scope to describe the market as in a “bubble”. These bonds known as US treasuries have very low yields with three year bonds returning 0.96 percent and ten year, 1.62 percent. If the US Fed increases interest rates, these bonds will lose value.

The three types of bonds available – fixed rate, floating rate and inflation linked – offer compelling protections that term deposits do not

I think it’s important to imagine what might happen to various markets and prepare now if you think a 1 percent cash rate is a possibility.

For some years the FIIG research team has pondered the loss of the Australian governments’ treasured AAA credit rating.

But can we count on them to continue delivering, or is it time to look at other forms of exposure to the sector?

No one knows what will happen to financial markets in the coming months but it seems likely that growing uncertainty – due to China, higher interest rates in the US, lower oil or something unexpected – will cause increased volatility

Britain’s crucial Brexit vote takes place on Thursday. Markets are getting progressively more nervous as polls converge, with investors realising it will take years to disengage from the EU and the drag this will have on trade and global growth if they decide to go

Just as cane toads have evolved to survive in a range of climates, hybrids have evolved to adapt to changing regulatory and interest rate environments The similarities do not end there because just like cane toads, hybrids have good, bad and ugly characteristics.