The term structure of interest rates is the relationship between interest rates or bond yields and different terms or maturities, which is also commonly known as the yield curve (Figure 1). The term structure of interest rates is the single most important benchmark in the fixed income world, central to all debt securities and plays a vital role in the [...]
The London Inter-Bank Offered Rate (LIBOR) is the average interbank borrowing interest rate used by the world’s leading banks (also known as the panel banks). It represents a primary benchmark for short-term interest rates globally and is used to value approximately $US350 trillion in derivatives and other financial products. Since 2013, the UK Financial Conduct Authority (FCA) has been the [...]
Last week, global equity markets experienced a severe sell-off which originated for the US following better than expected wage inflation data. While this is generally an indication of a strengthening underlying economy, equity investors were spooked of the idea that the era of easy month (and hence the return of a free flowing economy) was coming to an end. As [...]
One of the fundamental functions of capital markets is to determine an appropriate pricing of risk – the process of finding that magical equilibrium where the capital surplus suppliers and the capital deficit demand side are mutually agreeable, representing the fair cost of capital, given all the available information. That is the theory anyway. In practice, determining an appropriate price [...]
Listed Investment Companies (LICs) and Listed Investment Trusts (LITs) are types of investment products listed on a stock exchange. Unlike holding investment assets directly, LITs (henceforth also including LICs) , are professionally managed and are meant to enable investors (especially those without expertise) to optimise returns whilst achieving diversification across different asset classes by investing into the structure. By being [...]
In the realm of financial markets, a key topic of interest for many investors is performance attribution. Specifically, this refers to the individual components that form a security, portfolio or market’s total return over a pre-set time period. Depending on the required granularity of one’s analysis, the components can be broken down into many factors which can then be utilised [...]
The official cash rate, mostly because of low wages and poor economic growth, has been standing at 1.5% for 17 months in a row. This does provide organisations with incentives to raise capital at conducive borrowing costs but also depresses investors’ interest income and principle upside risks. However, with the domestic economy beginning to firmly strengthen recently, the cash rate [...]
In the Australian fixed income market, the vast majority of debt instruments pay interest periodically and repay principal upon maturity (or an optional call date), providing flexibility in managing cash flow and asset/liability matching risks. In comparison to the “interest only” payment structure, is another type of bond structure known as “amortising”, which distributes principal and interest (P&I) distributions periodically, [...]
Australia has one of the world’s largest compulsory retirement saving & pension systems known as the Australian National Superannuation Scheme, or super, in short. As at 30 December 2016, the Australian super system has A$2.2 trillion of assets under management - the 4th largest such system in the world. Superannuation funds operate as trusts with trustees being responsible for the [...]
Despite mixed economic signals, Australian investors are generally preparing for the rising interest rate environment in coming years. While the Reserve Bank of Australia (RBA) has kept the cash rate on hold for 15 consecutive months, there is consensus that the next move will be up with only timing being the real unknown. Consequently, a question that has been raised [...]
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ABN 31 164 148 467 ‧ Important Information
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
