The seemingly never-ending stories of impropriety from the Banking Royal Commission has highlighted inherent risks in being overexposed to this sector, which a large number of investors are. Not only do Financial businesses (banks, insurers etc.) account for over one-third of the ASX200 Equity Index but they also comprise a massive 84% of the listed bond market as investors have been funnelled into bank-issued securities due to a lack of alternatives.
Properly diversifying your investment pool not only means diversification at an asset class level but also diversifying individual exposures at the security level.
Key points for interest-bearing investors:
Securities issued by major banks represent a massive 84% of the listed bond market
Most investors are already overweight banks due to equity investments
The Royal Commission may lead to further regulation and lower returns for bank equity investors
In an environment of surplus investment capital, businesses continue to prefer issuing in over-the-counter (OTC) bond markets due to ease and reduced regulatory costs
With listed interest-bearing investment opportunities becoming more limited and concentrated to bank-issued debt, access to OTC bond markets is crucial in managing a properly diversified interest-bearing portfolio
The Cameron Harrison Wholesale Bond Facility addresses these issues by providing Wholesale/Sophisticated investors with access to a wider range of securities via the over-the-counter (OTC) bond markets. In reducing the minimum individual parcel size from $500,000 to just $20,000 per security, Cameron Harrison’s facility enables you to invest in a larger number of securities, reducing your exposure to the banking sector and producing a fully diversified interest-bearing portfolio