Our November meeting covered a variety of investment issues and some topics needed some analysis that I promised to do. A main topic for follow-up was “fixed interest returns” and with an official cash rate of 0.1% and Term Deposits yielding little more the question was “where can we go for better returns?”. The opportunity mentioned was Bond ETFs and my research showed the following. The ASX has 17 Australian listed fixed interest ETFs ( there are also 8 global ETFs on the ASX) The largest is The Vanguard Fixed Interest Index ETF.$1.32 billion funds under mgmt. ASX:VAX Second is iShares Core Composite Bond ETF (ASX:IAF) with $1.11billion FUM. Third is Betashares Australian Bank Senior Floating Rate Bond ETF (ASX:QPON) with FUM $0.78 billion. Fees for VAF & IAF are 0.2% and QPON 0.22%. Running yields VAF 3.27%, IAF 3.28% and QPON 1.87% 12 month returns - VAF 7.07%, IAF 7.09%, QPON 3.48%. These high returns reflect the capital gain from interest rate drops. VAF is a Vanguard Fund, large US company with many products in the [...]
John Porter The current ASX rout has created many headaches and opportunities. I have used bank hybrids as a superior yield investment ahead of TD’s and the like. They have fallen below par and may offer buying opportunities with a decent yield, franking credits and guaranteed capital value – unless the banks really fall over. The list below would offer around 10% capital growth at maturity and maybe more, dependant on the market. Code Coupon Distribution Frequency Share Price Expected Maturity CBAPG 3.4% + BBSW Quarterly $ 90.00 2025 ANZPF 3.6% + BBSW Semi-Annually $ 93.50 2023 MQGPC 4.0% + BBSW Quarterly $ 88.00 2024 WBCPI 3.70% + BBSW Quarterly $ 90.80 2026 NABPF 4.0% + BBSW Quarterly $ 90.00 2026
A mass of good reading here from these 4 opinions , following our discussions yesterday. https://www.livewiremarkets.com/keywords/covid
https://theconversation.com/australia-is-the-runaway-global-leader-in-building-new-renewable-energy-123694 This is the link requested at our meeting------we never hear about it !! Peter PS I would note that even if investment goes down capacity can go up because costs are decreasing so much.
Opportunities in sight from the top of the LIC cycle
"The 'yield curve' is one of the most accurate predictors of a future recession – and it's flashing warning signs" — http://theconversation.com/the-yield-curve-is-one-of-the-most-accurate-predictors-of-a-future-recession-and-its-flashing-warning-signs-119963
MORE ON YIELD INVERSION The following points came out of PIG’s April 2019 meeting. Yield curves as shown in the Forum show rate inversions in USA and Australia. In USA a rate inversion typically precedes a recession by 15 months but in Australia the linkage is not as definitive. A look at bond mechanisms showed the following relationships: Bonds yields (Govt in this example) are inversely related to bond value. If bond yields fall, bond prices increase. Conversely, if bond yields rise then bond prices fall. USA and AUS monetary policy post GFC was to stimulate the economies by increasing money supply and decreasing interest rates. USA Federal Reserve did this by buying bonds in the open market. Bond prices lifted, Govt funds were thereby injected into the economy (quantitative easing). In AUS the RBA seems to prefer public announcements via the management of the cash rate that influences the economy and perhaps some money supply management. In USA in early 2018 the FED commenced quantitative reduction with the effect that interest [...]