Patrick Salis
There are opportunities for growing Australian investor access to a more diverse range of fixed income investments.
While a range of bond and fixed income exchange traded (ETF) funds are already accessible on platforms along with some listed bonds on the ASX – wholesale trading platform AUSIEX, which recently acquired FIIG (Fixed Income Investment Group) – believes Australian investors are underweight bonds and that more can be done to increase direct investment.
“An expanded bond market presents a significant opportunity for bonds to play a larger role in Australian investors’ portfolios as well as in the wider economy,” says Patrick Salis, CEO of AUSIEX.
Mr Salis notes there are two major demographic trends that can be helped by better adoption of bonds in local investment portfolios, particularly for retirement phase accounts:
- As the Baby Boomer cohort retires, preservation of capital while still maintaining a steady return above the rate of inflation (income) becomes an important need. The greater use of bonds in a portfolio is a more optimal solution to this requirement than what can be achieved by relying solely on cash and equities for a given level of risk.
- As new generations enter the retirement system and they continue to use equities and new assets including ‘crypto currencies’, bonds can be used to balance the higher volatility of these assets in this cohort’s investment portfolios.
Mr Salis believes making bonds available on the platforms investors and advisers use every day is a critical part of improving access to this important asset class.
He adds, “We see the opportunity as in a sense similar to the early ‘E*TRADE era’ in the United States – when online platforms first made equities directly available to retail investors. Just as E*TRADE and the platforms which followed helped democratise equity investing globally, we believe this can also be done with fixed income investments, especially with the phasing out of hybrids from the local market.
“While fixed income solutions are increasingly available on platforms, an alternative way to improve access to and drive awareness and education on bonds is to enable direct investment in bonds. FIIG provides access to the primary market and a secondary market to investors and advisers in small parcels that are within reach of all Australians.”
Mr Salis adds AUSIEX is committed to supporting this initiative. “AUSIEX, for example, can combine our scale and technological know-how to work with industry partners, dealer groups, advisers and our wrap clients to make the vast over-the-counter bond market easily accessible to advisers and investors.”
“This will include ongoing investment in the AUSIEX platform which, via its recent FIIG acquisition, is now one of the most comprehensive investments trading and portfolio administration platforms in the country today.”
