Investors are demanding safe haven assets amid global market volatility - but are financial planners up to speed on fixed income? We speak to VICTOR RODRIGUEZ of Aberdeen Asset Management and MARK TODD of Fiig Securities on why fixed income is an asset class that can't be ignored.
Video transcript below:
Donna Sawyer: Investors are demanding safe haven assets amid global market volatility, but are financial planners upto speed when it comes to fixed income. Mark Todd of Fixed Securities says interest in bonds and term deposits is at an all time high. He says it’s an asset class that can’t be ignored.
Mark Todd, Fixed Securities
Mark Todd: I have been in the market since 85, so an awfully long time and I have never seen it in this way, the market seems to be going through a structural change. And so it’s all the volatility that’s come out of Europe, coming out of North America, but also locally where the investment around fixed income is much more attractive.
Victor Rodriguez, Aberdeen Asset Management
Victor Rodriguez: Is the knowledge as good it should be? I think it’s improved a lot, but you know we are committed to trying to continue to improve that knowledge so people have a better handle and are in a better position to make decisions about whether to be in or out of the asset class.
Mark Todd: I think when you look at the growth in the market and it has been a structural change. It would be remiss of the employee of a financial planner organisation not to be aware of such a growing asset class. It’s not the same, you know you look at property, you look at finance, you look at insurance, you need to be across all products, that’s the value add planners try and offer nowadays. And it makes sense that it’s such a rapidly growing market, you should be aware of it.
Donna Sawyer: Victor Rodriguez, Aberdeen Asset Management says it’s vital that financial planners understand the value of a balanced investment portfolio.
Victor Rodriguez: The most important advice is to understand how fixed income fits in a broader investment portfolio. So not to view the asset class in isolation, but to really know and understand how it can really benefit in a broader portfolio. If you have an investor for example, that has no exposure to growth assets, no exposure to equities or higher risk type assets, then the need for fixed income is actually a bit more debatable. You know you probably can afford to be all encashing it, people who are very sort of in the later stages of life and not really prepared to take any of that kind of risk. But to the extent you are getting more and more exposure and we know as a marketplace Australia is relatively much more highly exposed to equities than other pension fund markets around the world. Then understanding the importance of the asset class and how it fits into the broader investment portfolio, I think is the number one lesson to be learned.
Donna Sawyer: Mark Todd of fixed securities says fixed income may be the answer for many financial planners who are looking to value add.
Mark Todd: When I look at the planner world, I think they are constantly looking for what is the value add and it makes sense to me to be able to say if I was talking to a customer, they would have cash, they would have some equities, they would have some fixed income, it becomes harder if you are not familiar with the asset class. I think it is down to the education, getting familiar with the asset class and being able to bring some very attractive rates to some of your customers.
Donna Sawyer: This is Donna Sawyer reporting for Wealth Professional.