POWERED BY MOMENTUM MEDIA
Non-government bonds in demand
Demand from superannuation funds and other institutional investors for non-government bonds has significantly altered the risk benefit equation, according to the latest research paper issued by Tyndall.
The paper, “Investing in Credit Securities”, was authored by Tyndall senior credit analyst and points out the risks associated with investing in credit.
Chin said a decline in the amount of government bonds on issue had assisted the strong growth of non-government, largely corporate, credit securities in the Australian market, with non-government bonds having risen more than tenfold in the past 10 years.
Chin said demand amongst superannuation funds meant it was not expected that this trend would abate.
However, she said the changed mix of bonds available had inevitably changed risk.
“Chin said that when the market was predominantly made up of government bonds the primary risk to be managed was interest rate risk, but the changed composition of the market meant credit risk had become increasingly important.
“Specialist bond fund managers have learnt to adapt to the changed market by employing credit analysts to measure credit risk exposure,” she said. “But it is a difficult and complex task for direct investors.”
AUTHOR
Mike Taylor
Recommended for you
A member body representing some prominent wealth managers is concerned super funds’ dominance is sidelining small companies in capital markets.
Earlier this month, several Australian superannuation funds fell victim to credential stuffing attacks, which saw a small number of members lose more than $500,000.
Small- to medium-sized funds have become collateral damage in an "imperfect" model for super industry levies, a financial institution has said.
Big business has joined the chorus of opposition against the proposed Division 296 tax.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
93.34 3 y p.a(%)
2
Global X GlobalX FANG+ ETF
37.15 3 y p.a(%)
3
GAM LSA Private Shares AU I
33.96 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
29.68 3 y p.a(%)
5
Plato Global Alpha A
28.73 3 y p.a(%)
