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
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more

Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more

Property
Invest in property or watch savings dwindle, expert warns
Money is cheaper than it’s ever been on the back of a favourable interest rate environment, compelling Aussies to shift away from other types of investment vehicles and into property investment. ...Read more

Property
Is 2021 a great year to buy property? Aussies think so
2021 is tipped to be one of the busiest years for property ever as money remains cheap and readily accessible, with a majority of Aussies agreeing that now is a good time to buy. ...Read more

Property
Young Aussies set their sights on home ownership in 2021
The COVID-19 pandemic has accelerated younger Australians’ desire to own their own home, despite affordability remaining a significant concern, new research has revealed. ...Read more

Property
HomeBuilder stimulus causing surge in new houses: ABS
Housing schemes such as HomeBuilder and historically low-interest rates are causing a surge in new properties being built in Australia, official stats have shown. ...Read more

Property
Cancelled gap years could trigger first home buyer frenzy
COVID-19’s cancellation of travel plans could fuel demand from first home buyers in Western Australia, according to a chief executive. ...Read more

Property
When will Australia crack the $1m median house price?
A property investor has predicted Australia’s median house price will surge to over $1 million in the next three years, as the economic recovery acts as a tailwind for the industry. ...Read more

Property
How to turn your ‘costly’ lifestyle investment into a money-making asset
Emotionally driven holiday home buyers are being advised to seek maximum rental income and depreciation benefits to make their investments viable. ...Read more

Property
Dutch e-commerce giant VidaXL ramping up Australian operations
Netherlands-based online retailer VidaXL is ramping up its operations in Australia, by launching the build of a brand new 81,000 sq m national distribution centre in Melbourne. ...Read more

Property
Invest in property or watch savings dwindle, expert warns
Money is cheaper than it’s ever been on the back of a favourable interest rate environment, compelling Aussies to shift away from other types of investment vehicles and into property investment. ...Read more

Property
Is 2021 a great year to buy property? Aussies think so
2021 is tipped to be one of the busiest years for property ever as money remains cheap and readily accessible, with a majority of Aussies agreeing that now is a good time to buy. ...Read more

Property
Young Aussies set their sights on home ownership in 2021
The COVID-19 pandemic has accelerated younger Australians’ desire to own their own home, despite affordability remaining a significant concern, new research has revealed. ...Read more

Property
HomeBuilder stimulus causing surge in new houses: ABS
Housing schemes such as HomeBuilder and historically low-interest rates are causing a surge in new properties being built in Australia, official stats have shown. ...Read more

Property
Cancelled gap years could trigger first home buyer frenzy
COVID-19’s cancellation of travel plans could fuel demand from first home buyers in Western Australia, according to a chief executive. ...Read more

Property
When will Australia crack the $1m median house price?
A property investor has predicted Australia’s median house price will surge to over $1 million in the next three years, as the economic recovery acts as a tailwind for the industry. ...Read more