Seeking higher returns than cash with less volatility than shares?

Hybrid securities - Attractive returns with relatively low capital volatility and known cash flow

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What are hybrid securities?

Hybrid securities are a type of investment that combine both debt (payment of a coupon) and equity (no maturity date or very long maturities) characteristics. They're a way for banks and companies to borrow money from investors while achieving a better treatment (from a regulatory, accounting or credit rating perspective) compared to more traditional debt instruments.

Hybrid securities typically promise to pay regular interest at rates usually well above those paid on bank term deposits and offer greater potential for appreciation than regular bonds.

However, unlike a bond, the amount and timing of interest payments may not be as certain. For instruments issued by banks, they may also be exposed to mandatory conversion into the issuer’s stock or write down.

Hybrids pay a fixed or floating rate of return, generally higher than bank term deposits and regular bonds, and payments often entitle investors to franking credits.

Benefits of hybrid securities

Yield premium

Hybrids pay a fixed or floating rate of return, generally higher than bank term deposits and regular bonds, and payments often entitle investors to franking credits.

Volatility

Hybrids usually pay a regular, fixed interest payment so exhibit much less volatility in price than shares, although more volatility than traditional fixed income.

Diversification

Reflecting their uniqueness by combining elements of both equity and debt, hybrids can diversify the overall risk of your portfolio while generating attractive returns and therefore improve your portfolio’s risk-return profile.

Invest in Bonds with the Australian leader in fixed income

At FIIG, our clients are at the centre of what we do. For over 25 years we have put our clients first by providing fixed income expertise, direct access to a wide range of fixed income products, control and transparency through industry best practice custody and reporting services. Our staff are experts, with extensive experience working in fixed income markets in Australia and overseas. We have a vast range of best-in-class educational material to assist clients as well as a dedicated team of research and strategy professionals on hand.

Why choose us

600+

bonds available

6,000

Australian investors

1998

when FIIG was established

$5bn

of funds under advice with FIIG 

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It’s well known that the best way to combat uncertainty and to protect capital and income is to diversify investments. Replacing some of your shares with lower risk hybrids will help to lower the risk and improve diversification in your portfolio. Contact us to find out more.