Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
For those with limited experience in this area, are there any such instruments or options (in the general sense of the word; not actual option instruments) that Market Matters likes, particularly options that are high grade/low-risk and carry a high yield, say at least 6-7%? I have heard this is currently achievable on investment-grade instruments.
Hi Darren,
This is a big question with many moving parts, however in broad terms, we continue to like major bank tier 1 hybrids – 3 with varying time frames here.
Top Hybrid Picks:
< 3 years
WBCPI: 1.74yrs; 2.25% margin; 6.23% Yield to Call
3 – 5 years
WBCPJ: 4.38yrs; 3.09% margin; 7.42% Yield to Call
>5 years
NABPI: 7.13yrs; 3.12% margin; 7.62% Yield to Call
We also own the MCP Master Income Trust (MXT) which is a private debt fund trading at $1.89 which is a discount to net asset value (NAV) of $2, and we remain positive on this. They target a yield of the RBA cash rate plus 3.25%, which is currently 6.1%.
Finally, there are unlisted corporate bonds available, and given where rates are, an investment grade corporate bond portfolio that is 50% floating / 50% fixed can be constructed that yields around 6.7%.
These are simply general comments and we do suggest you seek advice around this.
Take a free trial.
No payment details required.
Forgot password? Request a One Time Password or reset your password
One Time Password
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
A link to create a new password will be sent to the email address you have registered to your account.
Hi, this is only available to members. Join today and access the latest views on the latest developments from a professional money manager.
Our Smart Phone App will give you access to much of our content and notifications. Download for free today.
