The Wire
The Wire is FIIG's weekly communication with its clients and produced by our Research Team.
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Direct Bonds
Normally restricted to purchases of $500,000 face value, high yielding investment grade bonds can now be acquired through FIIG in parcels as little as $50,000 face value. So it is possible for individuals, companies and self managed super funds to own a diversified portfolio of investment grade bonds delivering a high, consistent income stream. The bond market is no longer the exclusive domain of banks, fund managers and the ultra wealthy. There is an extensive list of bonds to choose from and the sample portfolio below illustrates just five of these.
Bonds can trade at a premium (above face value) at par (at face value) or at a discount (below face value). If you acquire bonds at a discount to face value you have the opportunity for capital gain at maturity as bonds will repay face value assuming they are not perpetual.
Points to consider
- Investors can choose fixed or floating rate bonds
- The amount invested in each bond can be increased subject to the size of the investor's portfolio and asset allocation decisions
- There are no entry fees, exit fees, management fees or holding costs
- FIIG's Financial Services Guide (FSG) explains this service in more detail
Another aspect to consider could be to include an inflation hedge in an investment portfolio. For example, investors can own a senior bond that pays a real rate of return over CPI. This preserves the purchasing power of money whilst providing a high, guaranteed rate of return over and above the rate of inflation.
