Smart yield ideas

Bonds were a popular asset class in Australia in 2010 as investors retreated from a volatile sharemarket created by the global financial crisis. The performance of bonds and shares has been very similar over the past 10 years, but shares have been much more volatile.

Bonds are a traditional asset class and should form part of all diversified investment portfolios. Plain-vanilla bonds offer holders a defined regular income profile and repayment date.

Therefore, investors should be able to rely on the issuer for a defined stable return, especially high-grade issuers such as governments or highly rated companies issuing corporate bonds. These bonds are viewed as a defensive asset class, in that they rank ahead of equity or equity-style instruments in the company structure and should still pay in times of stress.

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