Having completed its acquisition of fixed income provider FIIG, AUSIEX believes more can be done to increase direct investment of the assets.
AUSIEX acquired FIIG Holdings in June and said at the time that it sought to expand the range of products offered and provide services that meet a wider range of needs of institutions, family offices, financial advisers, high-net-worth and wholesale investors.
With the integration now complete, its next priority is focused on broadening direct investment of fixed income on the platforms used by financial advisers, particularly for retirement phase accounts.
These retirees are seeking preservation of capital while maintaining a return above the rate of inflation, while bonds can also be used to balance out the higher volatility of assets such as cryptocurrency or emerging market equities which are being found more and more in portfolios.
The firm’s paper, Prepare for Change: The Bond Atom, detailed how, while the creation of large public secondary bond market has been a challenge for the Australian industry, over-the-counter bonds are making them accessible to advisers.
“[There is] a cultural blind spot where the benefits of bonds are not widely known or understood, and structural inefficiencies in the Australian market make it harder to access and less attractive to issue.
“By embracing bonds, investors gain access to a third portfolio atom that acts as a vital ‘shock absorber’ against market volatility and risk. This allows for a more effective journey through the different stages of saving from accumulation to retirement.”
Specifically for financial advisers, it can envisage bonds being traded in the same way as managed funds are done so in separately managed accounts (SMAs). This would allow bonds to be disaggregated and made available on SMAs to allow for better service and potentially higher returns.
Commenting on the paper, Patrick Salis, chief executive of AUSIEX, said: “An expanded bond market presents a significant opportunity for bonds to play a larger role in Australian investors’ portfolios as well as in the wider economy.
“While fixed income solutions are increasingly available on platforms, an alternative way to improve access to and drive awareness and education on bonds is to enable direct investment in bonds. FIIG provides access to the primary market and a secondary market to investors and advisers in small parcels that are within reach of all Australians.”
