The rise in bond yields has left shares offering a low risk premium over bonds leaving them at risk of more softness. The conflict in Israel this week has added to the risk, although the threat should be minimal if Iran is not drawn in, avoiding a severe impact on oil supplies. AMP’s chief economist Dr. Shane Oliver looks at the parallels with the run up in bond yields prior to the 1987 crash, current …
Rising bond yields and the end of the super cycle bull market in bonds Key Points It’s normal for bond yields to rise in economic recoveries but it’s looking increasingly likely that the nearly 40-year super cycle decline in bond yields is over. This will remove a key tailwind for investment returns over the decade ahead but as we have seen this year bond yields are unlikely to go up in a straight line. Introduction …
Six reasons why shares are at or near record levels. But is it sustainable? Key Points Bonds and shares often diverge – we saw this a year ago with shares rallying but bond yields staying low. Shares have been boosted by strong earnings news, improved valuations, investor awareness of last years’ experience of a post lockdown bounce back, vaccines providing optimism in a more sustained reopening, some pressure for more stimulus & M&A activity. While …
Market Update 26 February 2021 Investment markets and key developments over the past week Global share markets fell over the last week as the selloff in bonds accelerated raising concerns about valuations. Bond yields increased significantly, particularly in the US and Australia and 10 year yields at their highs on Friday were up by around 100 basis points in the US from last year’s low and by around 130 basis points in Australia, before settling …
Key points Successful investing can be really difficult in times like the present with immense uncertainty around the impact of coronavirus on the outlook. This makes it all the more important to stay focussed on the basic principles of successful investing. These five charts focus on critical aspects of investing that are insightful in times of market stress: the power of compound interest; don’t get blown off by cyclical swings; the roller coaster of investor …
What is diversification? Diversifying your investments will reduce their risks and volatility, but what does it involve? Often described as “not putting all your eggs in one basket”, diversification is crucial to reducing the volatility of investing. It’s about spreading your risks. We know that the markets for different asset classes – such as bonds, shares, property or infrastructure – can go up and down for many reasons, but they usually don’t move in exactly the same way. While one market …
What are managed funds? You’ve probably heard friends or family say they have invested in managed funds, but what are these, how do they work and are they right for you? What is a managed fund? A managed fund is run by a professional fund manager, who pools together money from individual investors to invest in assets. There are many types of managed funds. Each will have a specific investment objective, usually focused on different asset …
What is an asset class? If you are starting to invest, you are sure to come across the term “asset class”. Don’t panic! You’ve probably heard of the different asset classes under their real names: cash, bonds, property and shares. An asset class is simply a group of investments that share similar characteristics, behave similarly in the market and are subject to the same rules and regulations. Most importantly, each asset class comes with different …
Investment bonds – a possible alternative to superannuation Because many people can no longer put as much money into super, an investment bond may provide another way to save for retirement. On 1 July last year, the amount of money many Australians could put into superannuation was reduced as a result of the introduction of more restrictive contribution caps. Consequently, some people were left asking the question – I have money or I expect to …
