Invest
Warning: Investment grade companies aren’t bullet-proof
Just because it’s an investment-grade asset doesn’t mean it’s immune to market movements, a global asset manager has said.
Warning: Investment grade companies aren’t bullet-proof
Just because it’s an investment-grade asset doesn’t mean it’s immune to market movements, a global asset manager has said.

Speaking to Nest Egg, Neuberger Berman global asset manager Vivek Bommi said investors need to take a nuanced approach to their investments and understand that nothing is a guarantee.
“Broadly speaking, just because you own something that's investment grade or highly rated doesn't mean you can't take a loss on it in a short to intermediate timeframe,” he explained.
“A good example is Apple.”
The computer company a few years ago bought a 30-year bond with a coupon around 3 per cent.

“Now that bond is down 10 points. It was down around 15 points because rates moved up and the sensitivity to interest rates for longer debt is just much higher,” Mr Bommi said.
“So think about it. You bought it two years ago, you would think, ‘Oh wow, I'm buying Apple Computer and they're paying me 3 per cent.’ And over two years you've gotten that interest. But your capital is down 10 points.
“You've taken a loss on that despite the fact that Apple's earnings keep rising. I think that's the thing you just have to be aware of; the sensitivity to those securities that have the interest rates.”
He said fixed income tends to have a lower volatility than equities and so is generally how investors access stability. Nevertheless, if an investor has half their portfolio in fixed income, they need to diversify further within asset classes.
“If you said 'I'm only going to buy investment grade bonds in that 50 per cent', [you should know that] this year investment grade bonds are down almost 2.5 per cent, so you want something always counteracting that,” Mr Bommi said.

Property
North platform adds household reporting feature to boost adviser efficiency
AMP's North platform has launched consolidated household reporting across multiple client accounts, helping financial advisers streamline their client review processes. Read more

Property
What Adds The Most Value To Properties?
Wondering how to up the value of your property? Properties are worth a lot of money in general, but there’s always a way to maximise value. The good news is that most of the things you can do to ...Read more

Property
Centuria reports strong growth in alternative real estate sectors for FY24
Centuria Capital Group has reported significant growth in alternative real estate sectors for the 2024 financial year, driving stable performance and increased guidance for FY25. Read more

Property
How to leverage equity in your home for investment or renovation
Home equity, the value of your property minus any debts owed, is a powerful financial resource many homeowners in Australia can utilize to further their financial goals. Whether you're looking to ...Read more

Property
Exploring REITs: Real estate investment without buying property
Real Estate Investment Trusts (REITs) offer a compelling investment alternative for those interested in the real estate market but may not want to endure the complexities and capital requirements of ...Read more

Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more

Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more

Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more

Property
North platform adds household reporting feature to boost adviser efficiency
AMP's North platform has launched consolidated household reporting across multiple client accounts, helping financial advisers streamline their client review processes. Read more

Property
What Adds The Most Value To Properties?
Wondering how to up the value of your property? Properties are worth a lot of money in general, but there’s always a way to maximise value. The good news is that most of the things you can do to ...Read more

Property
Centuria reports strong growth in alternative real estate sectors for FY24
Centuria Capital Group has reported significant growth in alternative real estate sectors for the 2024 financial year, driving stable performance and increased guidance for FY25. Read more

Property
How to leverage equity in your home for investment or renovation
Home equity, the value of your property minus any debts owed, is a powerful financial resource many homeowners in Australia can utilize to further their financial goals. Whether you're looking to ...Read more

Property
Exploring REITs: Real estate investment without buying property
Real Estate Investment Trusts (REITs) offer a compelling investment alternative for those interested in the real estate market but may not want to endure the complexities and capital requirements of ...Read more

Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more

Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more

Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more