SMSF solutions

Make corporate bonds the foundation of your SMSF strategy

Whether you are retired or still working, corporate bonds can play an important role to preserve your wealth and generate a predictable income stream.  Though investing in corporate bonds you can enjoy a reliable income stream and diversification from your equity and property investments.

The Benefits of Corporate Bonds

Earn a better return

Australian bonds have outperformed cash and Australian and Global shares in the 10 years to December 2016.*

 

 

 

* Gross returns for 10 years to December 2016- ASX 2017 Long-term Investing Report July 2017.

Better returns

Predictable income

Corporate bonds provide a regular income stream through interest payments.

Predictable Income

Capital preservation

Corporate bonds are a lower risk investment than shares in the same company because your principal must be repaid when the bond matures.

Capital Preservation

Diversify your portfolio

Diversifying your investments across different asset classes and markets is an important way to protect your wealth from the impact of market changes, interest rates, currency fluctuations and inflation.

Through bonds, you can also invest in assets that would otherwise be out of reach.

Diversify your portfolio

How to invest in Corporate Bonds

You can invest directly in Corporate Bonds through FIIG. It’s accessible, straightforward and transparent. There are two options, depending on how much time you want to spend thinking about your choice of Corporate Bonds.

  1. DirectBonds

    Our DirectBonds Service enables you to build a personalised portfolio suit your SMSF investment goals. Choose from over 300 bonds, from $10,000 per bond with a minimum portfolio balance of $250,000.

  2. Managed Income Portfolio Service (MIPS)
  3. If you want direct access to the Corporate Bond market but don’t have the time or expertise to make these decisions, MIPS combines the benefits of owning Corporate Bonds directly with the services of a professional portfolio management team. You still directly own the Corporate Bonds but FIIG constructs and manages the portfolio to match your SMSF investment goals and risk appetite.

Frequently asked questions

Companies or governments issues bonds as a way of raising funds. They borrow funds from investors in the form of bonds, making it a form of debt. When you purchase a bond, the issuer is legally obliged to pay you regular interest and at the bond’s maturity, pay back the face value of the bond to you.

Bonds are issued by many companies – from well known companies such as BHP, Qantas and Commonwealth Bank to smaller companies such as G8 Education and Praeco.

Over 300 bonds are available via FIIG’s DirectBonds Service. Wholesale qualified investors can also invest in foreign currency denominated bonds, including USD, GBP and Euro bonds.

When you purchase a bond, the issuer is legally obliged to pay you regular interest (referred to as coupons) and at the bond’s maturity, the face value of the bond (which is the price the bond was issued at – usually $100) must be paid back to you.

There are two main differences between corporate bonds and term deposits. Firstly, term deposits are only issued by banks and other financial institutions , whilst corporate bonds are issued by a more diverse range of companies across different sectors including retail, technology, transport and infrastructure. Secondly, term deposits must be held until they mature, whilst corporate bonds can be bought and sold when it suits you any time prior to maturity.

When you purchase shares in a company, you become a part owner of that company and there’s no certainty of income via dividends. With corporate bonds, you lend money to the company that issues the bond and it is legally required to pay you regular interest and repay the face value of the bond when the bond matures. This means that investing in a company’s bond is a lower risk than owning its equity or shares.

Another major difference between shares and bonds is that shares are generally traded on an open exchange such as the ASX, whereas the majority of corporate bonds are traded on the Over the Counter market.

Warwick Blowes - Case Study

"Corporate bonds are a great defensive asset class and far more interesting than having money sitting in the bank."

- Warwick Blowes

View the case study

For more information

The Benefits of Bonds eBook

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Talk to an expert

George Cupac -  State Manager Markets - Victoria Bianca Burt - Associate Director, Money Market Sales John Sheridan - Head of Private Clients NSW/ACT Mark Connors - State Manager Mark Mccudden - Director –NSW, ACT, QLD  Adviser Services  

Phone  Call us on 1800 01 01 81

...with offices based in Sydney, Brisbane, Melbourne and Perth