1) What is the effect on the bond market in this crisis, and how secure is the cash and our defensive assets in our portfolio?
There are high-quality, investment grade bonds issued by governments and government authorities and high credit rated organisations. Then there are sub investment grade bonds. There is a very high-level of demand from investors to be owning the high credit quality, government issued, double A and triple A bonds and sub investment grade bonds. The price of lower quality, fixed-interest investments dropping, meaning the return for investors is much higher. Price drop for high quality bonds has been very minimal during this time.
Capital Partners fixed interest investments are very secure. The fixed interest investments are for when you need access to capital. They are secure due to the high-level liquidity of the fixed interest funds. For high quality bonds (AA/AAA) there is a very active market and high demand from global investors to buy these high-quality bonds. There is a large level of diversification, limited to 1% of the portfolio being exposed to any one bond issuer. Our bond maturity is short, which is very important for facilitating liquidity. These are all here so when you need to access capital, you can do so.
2) When is a good time to invest more cash whilst stock markets are down?
There is no perfect time and it requires a systematic approach. Market sell off will provide good buying opportunities. Have a conversation with your adviser about a staged entry approach.
3) What does QE mean?
QE is an abbreviation for quantitative easing. This is an unconventional monetary policy where banks purchase long term securities from the open market to increase money supply and encourage lending and investment.
Click the link below to watch this episode.
