Hi Don,
A very large encompassing question here, I’ve attempted to pick out some salient points in todays environment of rising interest rates but obviously an investors needs & requirements largely determines the answer:
- Lets consider the Commonwealth Bank Hybrid (CBAPG) which we hold in our Active Income Portfolio, it pays a fully franked quarterly dividend of the 90-Day Bank Bill Rate +3.4%, better than money in the bank although with CBA there’s a degree of risk. Obviously we like this investment as we hold it, and with its yield being consistently 3.4% above the bank bill rate its not negatively impacted from a yield perspective by rising interest rates.
Hence over the last year hybrids such as the CBAPG have outperformed the ASX through their dividend and relatively stable value.
- In terms of what’s the right time to accumulate hybrids and when is a good time to lighten I would say if your bullish equities and in particular the banks CBA shares should outperform and while interest rates are rising and stocks struggling the Hybrids should trade better, just as they have through 2022.
In terms of which hybrids represent best value at present at MM we vote with our money hence we advocate the ones we are holding such as the CBAPG, ANZPI and the WBCPK’s.
