Malcolm in the middle

A survey at the SMSF Association conference in Adelaide asked advisers if they thought hybrids were fixed income securities. 47% said they were, or they were unsure. With a growing acceptance of the ‘lower for longer’ case for rates, this question becomes more important for investors facing ultra-low returns on Cash and TDs. There’s a nationwide search going on for yield, but without capital volatility. Hybrids are being ‘sold’ as if they were a fixed income alternative to TDs. Given their inevitable volatility this is a recipe for disaster for investors thinking they’re buying fixed income securities like government bonds or senior corporate bonds. Read my blog on the link below, which makes the case why hybrids can superficially appear to be one thing, when in fact they’re another – a matter debated at ‘The Bond Forum’ held in late April in Sydney. (VIEW LINK)