POWERED BY MOMENTUM MEDIA
Risk equation altered on bonds – Tyndall
Penny Chin
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 Penny Chinn, 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 learned 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
The two funds have announced the signing of a non-binding MOU to explore a potential merger.
The board must shift its focus from managing inflation to stimulating the economy with the trimmed mean inflation figure edging closer to the 2.5 per cent target, economists have said.
ASIC chair Joe Longo says superannuation trustees must do more to protect members from misconduct and high-risk schemes.
Super fund mergers are rising, but poor planning during successor fund transfers has left members and employers exposed to serious risks.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
88.01 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
72.60 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
44.46 3 y p.a(%)
4
Pengana High Conviction Equities B
39.12 3 y p.a(%)
5
Pengana High Conviction Equities A
39.05 3 y p.a(%)
