Invest
Investors warned on bonds marketing trap
Investors have been cautioned that bond managers are increasingly using the phrase 'absolute return' to market their credit funds, despite the fact that they have experienced substantial drawdowns.
Investors warned on bonds marketing trap
Investors have been cautioned that bond managers are increasingly using the phrase 'absolute return' to market their credit funds, despite the fact that they have experienced substantial drawdowns.
Speaking to nestegg.com.au’s sister publication InvestorDaily, Alex Gitnik, Standard Life Investments' fixed income and absolute return investment director, said investors must be “really careful” when they choose absolute return funds.
“There are genuine absolute return bonds funds and there are absolute return pretenders,” Mr Gitnik said.
“As a result of market trends and demands for absolute bonds, we saw some managers effectively rebranding or rebadging their funds,” he said.
Some so-called 'absolute return' bond funds are down between five and eight per cent for the year to date, Mr Gitnik said.
“That is just not consistent with the term 'absolute return',” he said, which implies a certain amount of capital preservation or 'insurance'.
Andrew Yap, Zenith Investment Partners head of income and multi-asset research, told InvestorDaily there has been a lot of 'hype' about unconstrained fixed interest strategies in recent months.
For its purposes, Zenith divides the unconstrained fixed interest universe into 'absolute return', 'total return' and 'alternative debt' funds.
“Absolute return funds are deemed to be the most conservative across the unconstrained space,” Mr Yap said.
“It is, however, important for investors to be wary about the names ascribed to funds.
“Many funds are badged as 'absolute' return; however, as there is little consistency with regard to industry standard/naming conventions, it can be challenging to make like-for-like comparisons,” he said.
Mr Gitnik, who is based in the UK, said the Financial Conduct Authority (the UK regulator) is “getting worried” about the rebadging of credit funds as 'absolute return' bond funds.
ASIC did not respond to request for comment in time for deadline.
Bonds
Corporate bond market review makes 12 recommendations to enhance investment
Twelve recommendations have been made to support the development of a more active corporate bond market in Australia. ...Read more
Bonds
Common mistakes in buying bonds that investors should avoid
The bond market is considered as a safe haven for Aussie investors and it’s easy to see why. ...Read more
Bonds
Student files lawsuit over government bonds
A 23-year-old student has filed a lawsuit against the Australian government after alleging that it failed to disclose climate change-related risks to investors in the country’s sovereign bonds. ...Read more
Bonds
Bonds in the ‘new normal’ – navigating a recession
Dampening downside risk during a global economic downturn requires active management and informed decisions, writes Justin Tyler. ...Read more
Bonds
Buyers beware of silent risks in bond markets
Investors are being urged not to fall into the trap of buying inferior-quality bonds in a low-yielding environment, despite the promises of higher returns, an industry expert has warned. ...Read more
Bonds
Reasons to invest in government bonds
Many investment experts recommend adding government bonds to an investment portfolio in order to reap its benefits while limiting risks and losses. ...Read more
Bonds
What is credit investing and how does it work?
A well-diversified investment portfolio typically includes credit investments to balance risk and return. Here’s what you need to know about credit investing and how it works. ...Read more
Bonds
Blockchain bond sees $50m boost
The first bond to be created, transferred and managed through its life cycle using blockchain technology has received a new funding boost. ...Read more
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
How the post-lockdown period will influence property, what the soaring NFT market means, and defining financial wellness
Listen now
Bonds
Corporate bond market review makes 12 recommendations to enhance investment
Twelve recommendations have been made to support the development of a more active corporate bond market in Australia. ...Read more
Bonds
Common mistakes in buying bonds that investors should avoid
The bond market is considered as a safe haven for Aussie investors and it’s easy to see why. ...Read more
Bonds
Student files lawsuit over government bonds
A 23-year-old student has filed a lawsuit against the Australian government after alleging that it failed to disclose climate change-related risks to investors in the country’s sovereign bonds. ...Read more
Bonds
Bonds in the ‘new normal’ – navigating a recession
Dampening downside risk during a global economic downturn requires active management and informed decisions, writes Justin Tyler. ...Read more
Bonds
Buyers beware of silent risks in bond markets
Investors are being urged not to fall into the trap of buying inferior-quality bonds in a low-yielding environment, despite the promises of higher returns, an industry expert has warned. ...Read more
Bonds
Reasons to invest in government bonds
Many investment experts recommend adding government bonds to an investment portfolio in order to reap its benefits while limiting risks and losses. ...Read more
Bonds
What is credit investing and how does it work?
A well-diversified investment portfolio typically includes credit investments to balance risk and return. Here’s what you need to know about credit investing and how it works. ...Read more
Bonds
Blockchain bond sees $50m boost
The first bond to be created, transferred and managed through its life cycle using blockchain technology has received a new funding boost. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
