Invest
Australia’s ‘disturbing’ investing culture needs to change: fixed income expert
Invest
Australia’s ‘disturbing’ investing culture needs to change: fixed income expert
Australia’s “love affair with equities” leaves investors extremely exposed to the cycle and needs to change, the managing director of a fixed income investment firm has said.
Australia’s ‘disturbing’ investing culture needs to change: fixed income expert
Australia’s “love affair with equities” leaves investors extremely exposed to the cycle and needs to change, the managing director of a fixed income investment firm has said.
The managing director of FIIG Securities, Jim Stening said in Sydney today that Australian investors’ and advisers’ asset allocation tendencies is “disturbing” as it leaves investors more vulnerable to the cycle and this is especially dangerous for retirees.
Speaking to mark the launch of Deloitte Access Economics’ Corporate Bond Report 2018: Australia’s growing appetite for corporate bonds, Mr Stening said: “The interesting thing about this culture that needs to change in Australia [is that] a lot of high-net-worth individuals, the way they invest, is trying to balance cash and equities.
“They kind of jump from one end to the other and try to pick the cycle. I think it’s a lot easier to look at opportunities in the middle to get that targeted return.”
The OECD average pension fund asset allocation to bonds and bills was 40 per cent in 2016. That’s compared with Australia’s 10 per cent.
The report, commissioned by FIIG, surveyed 700 high-net-worth investors and found that the average investor was invested heaviest in property followed by cash or term deposits and then Australian shares.
Arguing that the main barrier to bond investment is a lack of understanding and awareness, Mr Stening said: “We seem to have this love affair with equities and even within the fixed income allocation are tier one hybrids which effectively are equities as well.
“When you consider that, and consider what sort of global best practice is in terms of asset allocation I think Australia's got a lot to learn.”
Continuing, he said the exposure to the cycle is extremely dangerous for people entering or in retirement.
“My view would be that providing investors with guidelines around asset allocation would be a great start. If i want to be really radical, then being completely proscriptive about that would be a great idea.”
Noting the controversy sparked by Labor’s proposed reforms to cash refunds on excess dividend imputation credits, Mr Stening said should the proposal materialise into legislation, then bonds would “come more squarely into the frame”.
Continuing, he said this was especially true given that hybrids are “pretending to be bonds”.
“I think there's probably some work to be done around the tax side of things in this country; it really does promote an investment culture that's probably not appropriate.”
RELATED ARTICLES
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
Property
New investment platform Arkus allows Australians to invest in property for just $1
In a groundbreaking move to democratise investment in property-backed mortgage funds, GPS Investment Fund Limited has launched Arkus™, a retail investment platform designed to make investing ...Read more
Property
Help to Buy goes live: What 40,000 new buyers mean for banks, builders and the bottom line
Australia’s Help to Buy has opened, lowering the deposit hurdle to 2 per cent and aiming to support up to 40,000 households over four years. That single policy lever will reverberate through mortgage ...Read more
Property
Australia’s mortgage knife‑fight: investors, first‑home buyers and the new rules of lender competition
The mortgage market is staying hot even as rate relief remains elusive, with investors and first‑home buyers chasing scarce stock and lenders fighting for share on price, speed and digital experienceRead more
Property
Breaking Australia’s three‑property ceiling: the finance‑first playbook for scalable portfolios
Most Australian investors don’t stall at three properties because they run out of ambition — they run out of borrowing capacity. The ceiling is a finance constraint disguised as an asset problem. The ...Read more
Property
Gen Z's secret weapon: Why their homebuying spree could flip Australia's housing market
A surprising share of younger Australians are preparing to buy despite affordability headwinds. One in three Gen Z Australians intend to purchase within a few years and 32 per cent say escaping rent ...Read more
Property
Tasmania’s pet-positive pivot: What landlords, BTR operators and insurers need to do now
Tasmania will soon require landlords to allow pets unless they can prove a valid reason to refuse. This is more than a tenancy tweak; it is a structural signal that the balance of power in rental ...Read more
Property
NSW underquoting crackdown: the compliance reset creating both cost and competitive edge
NSW is moving to sharply increase penalties for misleading price guides, including fines linked to agent commissions and maximum penalties up to $110,000. Behind the headlines sits a more ...Read more
Property
ANZ’s mortgage growth, profit slump: why volume without margin won’t pay the dividends
ANZ lifted home-lending volumes, yet profits fell under the weight of regulatory and restructuring costs—an object lesson in the futility of growth that doesn’t convert to margin and productivityRead more
