Domestic bonds are typically under-represented in Australian portfolios, but recent volatility in the share market is making investors reassess them.
Australians have a total asset allocation to government and corporate bonds of about 13 per cent, whereas in other G20 countries the figure is between 20-30 per cent, according to Omega Global Investors director of investments Mathew McCrum.
He added that with an increasing number of superannuation members moving out of the accumulation phase and into the drawdown period, there would be a rise in demand for defensive assets.
"Australia is in an enviable fiscal position compared to many other developed nations and Australian Government bonds provide an attractive yield, especially on a risk-adjusted basis," said McCrum.
"Australian corporate bonds also compare very favourably to their European and US counterparts, especially in the current market. This gives investors access to increased diversification and higher yields," he added.
Omega Global Investors has released the Australian Bond Fund, which McCrum said carefully selected bonds on a risk-controlled basis because "simply following the benchmark is inefficient".
The Australian Bond Fund will open on 9 September and will start with $200 million in funds under management.
The research house has offered a silver lining after super fund returns saw the end of a five-month streak last month.
A survey of almost 6,000 fund members has identified weakening retirement confidence, particularly among those under 55 years of age, signalling an opportunity for super funds to better engage with members on their retirement journey.
The funds have confirmed the signing of a successor fund transfer deed, moving closer to creating a new $29 billion entity.
A number of measures, including super on Paid Parental Leave, funding to recover unpaid super, and frameworks to encourage investment in the energy transition, have been welcomed by the superannuation industry.
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