In a theoretically efficient fixed income market, closely related bonds (or derivatives) with similar risk characteristics would always be priced consistently. In reality, these prices persistently diverge from each other, which means fixed income markets are inefficient.
Liquid securities are those that can be readily bought or sold in sufficient volumes, at reliably transparent prices, without incurring punitive transaction costs. Illiquid securities are those that fail to meet these criteria to varying degrees. Liquidity is a spectrum rather than a binary concept.
In this podcast Portfolio Manager, Gopi Karunakaran, speaks to Alan Kohler about the Ardea Real Outcome Fund and how it operates.
Conventional approaches to fixed income investing rely on bond yields to generate returns. Most of the returns come from accumulating portfolios of bonds to harvest yield.
2019’s rampant bond rally came to a halt this month as bond yields rose, causing bond prices to fall across most major bond markets.
A common way to think about bond yields is to view them as a cushion that protects bondholders from the potential negative effects of duration risk. As bond yields have now collapsed to very low levels, that protection from duration risk has vanished.
In this nabtrade podcast, Gopi Karunakaran discusses alternative types of fixed income and the key risks investors should be considering.
Some central banks are pushing monetary policy into the upside down world of negative interest rates, but rather than success they are creating bizarre side effects.
Since the early 2000’s the name ‘Mrs. Watanabe’ has been used to describe yield seeking Japanese retail investors, who were forced to increase their offshore investment risk taking in response to ultra-low interest rates back home.
How is it that traditional safe haven assets like gold, government bonds and the Japanese yen are all performing strongly this year, just as risky assets like equities, credit and emerging markets are also doing very well?