Spectrum Insights – Picking up pennies in front of a steamroller

Spectrum Insights – Picking up pennies in front of a steamroller

The title above is an old analogy used by some corporate bond investors to describe their job. The returns come in small steady amounts (pennies). One slip, however, and the damage can be painful. The risk of getting “run over by a steamroller” appears ever more relevant today. A slowing or reversal of central banks’ ultra easy monetary policies risks losses for many assets including fixed rate bonds. That’s the bad news. The good news for corporate bond investors is international and Australian default rates are set remain low or even fall. This supports steady returns for A$ corporate bonds, in particular those with floating rate notes, for at least the coming months…

To read the full report please click here: Spectrum Insights – Picking up pennies in front of a steamroller

 

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