While you are considering investing in the ever-popular alternative investment space, there are several traps to be aware of before signing up for any investment. Risks exist in every investment opportunity — which is why you get a return greater than 0 per cent — but this doesn’t mean...
Private credit in the investing space is a growing market where senior secured debt, asset-backed lending, structured and project finance, mezzanine debt and other forms of unsecured debt happen and exist across a wide range of underlying asset classes.
Attractive returns are available in private markets through simply providing the...
Dispelling Popular Beliefs Summary
For fixed income investors, the current macroeconomic environment presents uncomfortable choices, with policymakers walking a thin line between combatting inflation and averting (or at least mitigating) the recessions that often follow rate rises.
Market participants face a slew of competing concerns:
Rising rates will hurt the asset...
Verdict
US Treasuries (UST) and US Investment Grade often generate flat to negative performance in periods of rising yields. But a number of fixed income sub-sectors have provided moderate-to-strongly-positive returns during rising-rate periods, though the factors supporting performance are changing over time.
Periods when UST yields are rising (used here...
Verdict
A risk-off stance in fixed income is broadly beneficial during recessions, minimising exposure to defaults. However, High Yield performance is not far behind Investment Grade, with the HY market typically recovering significantly earlier than the real economy.
Received wisdom for recessionary investing is to favour higher quality, longer duration asset...
Verdict
Short duration bonds often outperform during rising rate periods, show resilience in recessionary conditions and—overall—produce lower volatility and better risk-adjusted returns. However, bad debt may crowd the short-duration high yield market at times of credit stress.
Shorter duration fixed income has substantially underperformed the wider market over the past decade,...
In this educational article, Elizabeth Moran shows how Credit Default Swaps can forewarn investors of trouble ahead.
Large institutional investors with significant bond holdings will sometimes take out insurance against default and these contracts are known as Credit Default Swaps (CDS).
The buyer of the CDS will pay a fee on...
Are we nearing the top of the interest rate cycle?
Perhaps. One sign that might suggest we are close was this week’s announcement of October’s retail sales rates. Rates declined unexpectedly with spending down 0.2%, when it was projected to increase by 0.6%, perhaps a signal that the RBA’s cash...
If you are thinking about investing direct, then there are a number of factors you’ll need to assess.
While many of the metrics will be similar to shares, they are some important differences. For example, growth is a crucial assessment when investing in shares. However, bondholders do not care if...
The desire to invest in bonds seems to be back in fashion again after a very poor 1H22. Rates are attractive and investors are flocking back to the asset class.
If you are a first-time investor or thinking about reinvesting, you can invest direct in individual bonds or indirect, through...
