June 27, 2016

Bonds 101 – A “Quantum of Solace” for your portfolio….

By David Hann, Director Fixed Income Sales, FIIG Securities Limited

Bonds 101 – a “Quantum of Solace” for your portfolio…

With investment markets around the world continuing to be “shaken and stirred” daily, it may be prudent to consider an asset class that is both income producing and considered capital stable.

Enter Bond…James Bond or in this case Fixed Interest investment.

The Fixed Interest Market (aka the Bond Market) is a relatively new investment space in an Australian context, particularly direct investment or purchase of individual bonds.

The Bond Markets in the United States and Europe are older and larger than their own equity markets. The Australian Bond Market is relatively new in comparison but it is evolving and now investors can access Bonds directly with as little as A$10,000 per Bond.

Professional Investors are well versed in the benefits of Bonds in a diversified portfolio. For example if we look at a breakdown of QBE’s 2015 US$26Bn Investment Portfolio, it reveals 88% or almost US$23Bn is in Fixed Interest investments.

This includes; US$5.9Bn (22.8%) Short Term Money Markets ie Term Deposits, US$4.2Bn (16%) Government Bonds and US$12.4Bn (47.6%) Corporate Bonds.

See below for the full article.

Please Note: Many of the comments in this article are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.


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