While IAB bonds are sometimes perceived as being complex for their unique features, they are not so complicated once you know how to think about them. IABs pay quarterly payment that has it’s purchasing power preserved through indexation to inflation. Because the cash flow is indexed to inflation, the yield includes an inflation assumption. The par value needs to be calculated, but works in a similar way to a mortgage, with each quarterly payment having both an interest and a principal component.
Opinion
The Lucky 7 piece steps through four different possible outcomes for the RBA. The scenarios range from an unexpectedly high interest rate outcome to a rate cut cycle that would only occur if the economy materially weakened. In between are two much more likely scenarios that involve much less movement in the RBA rate.
Understanding the likely evolution of a bond’s price is critical to successful fixed income investing. All bonds have some exposure to interest rates or other risks and the price of a bond will change over the course of the investment. However, the structural features of a bond materially affect how and by how much the bond will react to changes in market rates. This article explains the most common types of bonds and explores the likely evolution of their prices over time.
Education (basics),Education
In this article, we take a look at the Semi-Government Bonds, who sells and buys them, what types of bonds are available, yields, and advantages and disadvantages of Semi-Government Bonds.
Education (basics),Education
In this article, we look at how best to construct a balanced portfolio through the inclusion of fixed coupon, or floating rate notes and inflation-linked bonds and the benefits each type of bond offers.
In this article, our Head of Research, Philip Brown, summarises what BBSW is, how it behaves, and what is meant by bank bills, BBSY, swaps and benchmarks. The Bank Bill Swap Rate, commonly known as BBSW, is the most common measure of short-dated interest rates in Australia. Strictly speaking, it is the rate at which Australia’s prime banks borrow money for short periods, like three months or six months. BBSW is normally near, but just above, the RBA cash rate.
As part of the recent FIIG webinar on the Macroeconomic Outlook, we opened the (digital) floor to questions. Working on the theory that if one person is curious enough to publicly ask the question, a lot more people are curious enough to know the answer, we present the questions from that webinar with answers written by FIIG’s Head of Research, Philip Brown.
FIIG research has published a detailed analysis of the outlook for 2024 and then followed it up with a detailed webinar on the same topics. For both the outlook for 2024 and for analysis of the RBA, the key to understanding is, in our view, to take a second look at the question to understand the details a little below the surface. In this article, we will take a closer look at the state government capex spending, cash rates around the world, labour markets in Australia and a LOCK strategy to guide successful bond market investing in 2024.
Education (basics)
Asset-backed securitisation is a funding technique that allows the pooling of a large number of loans into a single financing vehicle, which then issues a number of different tranches of debt with varying seniority.
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FIIG’s Investment Strategy Team conducts an annual review of client portfolios, in addition to portfolio reviews carried out throughout the year. This assists clients to better understand the construction of their portfolios to make more insightful investment decisions.