Corporate bonds can provide stability and protect against equity roller-coasters.
2018 was a bumpy year for shares globally. The Australian market finished down around 2.8% including dividends, or 6.9% excluding dividends.
The threat of trade wars and rising interest rates in the US were the main culprits for the downturn in September. These events effectively wiped out the year’s gains. If your portfolio has a lot of growth-style stocks your annual performance was probably well into negative territory.
Whilst corporate bonds still suffered some losses at the end of the year, the Corporate Bond Index finished the year with total returns of just under 4%.
2018: Bond market stability vs Share Market volatility
Interest in corporate bonds increases
We saw a noticeable increase in calls from new investors towards the end of last year, as the share market continued to fall. With volatility still on the horizon for much of 2019, we expect this trend to continue. Australian investors are increasingly seeking out certainty outside of Term Deposits.
Professional investors are also looking more closely at corporate bonds this year.
Blackrock recently released a report showing 40% of the 230 institutions surveyed planned to increase their fixed income exposure this year.
We often see this following an equity market fall as investors increasingly look for ways to provide protection to their portfolios.
Heard of corporate bond XTBs, but still have questions?
Many investors have heard about corporate bond XTBs but have not yet had the time to fully understand them. If this is you, we are here to help answer your questions, so why not give us a call?
Email us now to arrange a one on one call with XTB Relationship Manager Simon Riordan. Simon can help answer any general questions you have concerning bonds and XTBs. So, if you’ve not bought bonds before and want to talk it through with someone before you commit, Simon can guide you through the process. Any advice provided is general in nature and does not take into account any person’s specific circumstances.
There is no charge for this service and he can call you at a time that works for you. Simon is not a stockbroker. If you decide to purchase XTBs you will still need to do this via your financial adviser, or your online share trading account.