B. MOSES ASSET MANAGEMENT
Diversify away from the equities market
Stable And Predictable Income Investments

Expand your investment strategy beyond the equities market to enhance capital protection. Our expertise in interest-based securities and alternative fixed-income investments is specifically designed to safeguard your portfolio. Additionally, you can leverage our diverse range of alternative income products and private debt opportunities to optimise performance. Let us tailor these solutions to meet your unique investment goals.

Protecting your investments is paramount

Fixed Income Investing, Bonds, Private Debt Investments and Alternative Fixed Income Products for Institutional, Wholesale and Retail Investors

Fixed-income investing involves purchasing securities that provide regular fixed-interest payments until maturity, at which point the principal amount is repaid. This category of investments includes instruments like government and corporate bonds, municipal bonds, CDs (Certificates of Deposit), and preferred stocks.

Fixed-income investments play a crucial role in financial planning and investment management. It offers investors stability, predictable returns, and a conservative avenue to balance riskier investments, making it an essential component of a diversified portfolio.

fixed income investing securities such as bonds pay a defined income, generally at a higher rate than the interest paid on bank deposits. The issuer of the security promises to pay the face value of the bond to you in cash at maturity. Note there are some bonds, termed ‘perpetual’, that have no maturity date. Traditionally, bond prices are typically more stable than share prices. 

Security

Bonds are commonly issued as unsecured and unsubordinated, meaning the debts are not secured against company assets but rather are guaranteed by the company. On a ranking of creditors, bondholders typically rank above shareholder and below any secured debt holders.

Floating rate 

A floating rate means you are exposed to changes in interest rates. With a floating rate, your payments are linked to a market interest rate. As the market benchmark rate changes, so too do the payments you receive. At regular intervals, usually at the start of each quarter, the payment rate is adjusted to reflect changes in the market benchmark rate. As interest rates rise, your income increases and as rates fall, your income decreases. Investors who think rates will rise might consider buying a bond paying a floating rate.

Regular Income: Investors receive steady interest payments on their investment, typically semi-annually, annually, or at other set intervals. The rate of these payments generally remains fixed throughout the term of the security.

Return of Principal: Upon the security’s maturity, the issuer is expected to pay back the principal amount originally invested, barring any default.

Risk and Return Profile: The risk in fixed income investing varies. Government bonds (such as U.S. Treasuries) are usually considered safe with lower returns, while corporate bonds can offer higher returns but come with increased risk of default.

Income Generation: Fixed-income investments provide predictable income, which is particularly appealing to retirees or those who need regular income to meet day-to-day expenses.

Capital Preservation: For conservative investors, fixed income securities are appealing due to their lower risk profile compared to equities. They are less volatile in normal market conditions, providing a safer vehicle for preserving capital.

Diversification: Including fixed-income securities in a portfolio can help diversify investment risks. Bonds often have an inverse relationship with stocks; when stock markets perform poorly, bonds tend to remain stable or increase in value, thus balancing the portfolio’s performance.

Inflation Protection: Some types of fixed-income securities, like Treasury Inflation-Protected Securities (TIPS), are designed to offer protection against inflation, thereby safeguarding the purchasing power of the investor’s future income.

Risk Management: Fixed-income securities can be used to manage the risk in a portfolio, acting as a buffer against the volatility of equity markets.

Fixed-income investments like bonds offer a stable source of income, typically yielding higher returns than traditional bank deposits. When you invest in bonds, the issuer commits to repaying the face value upon maturity.

It’s important to note that some bonds, known as “perpetual bonds,” do not have a maturity date and may provide ongoing income. However, bonds generally exhibit more price stability compared to stocks, making them an appealing option for conservative investors seeking less volatility.

Security Details:

Bonds are often unsecured and unsubordinated, which means they are not backed by specific company assets but are guaranteed by the issuer’s full faith and credit. In the hierarchy of corporate obligations, bondholders usually have a higher claim than shareholders but rank below secured debt holders.

Floating Rate Bonds:  

Investing in floating-rate bonds means your returns are tied to market interest rates, adjusting generally at the beginning of each quarter. This adjustment aligns with changes in a specified market benchmark rate. As a result, when interest rates increase, so does your income, and vice versa. This strategic investment option is particularly suitable for investors who anticipate a rise in interest rates and wish to benefit from corresponding increases in their investment income.

Understanding Floating rate

Floating rate is typically the benchmark rate to be used, and the margin is to be added to the benchmark. The benchmark plus the margin equals the floating rate for that payment period. For example, if a company specify payments of ‘BBSW+4.0%’, this means: 

  • the benchmark rate is the Bank Bill Swap rate (BBSW), and
  • 4.0% will be added to the BBSW to reach the payment rate.
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Frequency of payments 

Income is usually paid in arrears either quarterly or semi-annually (twice a year). In arrears means the investor receives payment at the end of the period over which the income is earned. Generally, the more often you receive income distribution the better. Receiving your income distribution earlier means you can reinvest it sooner to produce more income. 

At maturity

When the bond is held until maturity, the issuer will pay back the face value. When the issuer pays you the bond’s face value, this is called redemption. Note some bonds give the issuer the right to redeem the bond ahead of maturity.  

Before maturity 

When an investor wants to exit the investment before maturity, you will have to sell on ASX. There is no guarantee you will receive face value for your bonds when you sell on the market. The market price at the time you want to sell may be above or below face value. 

Change in interest rates 

If market interest rates have changed since the time the bond was issued, the bond’s price will probably have changed too.