Seeing a need to minimise the risk of future loss of capital, John looked into other areas of investing – corporate bonds - that, in his own experience, were less understood. “My anecdotal experience is that few have heard of corporate bonds, only government bonds, but I suspect that, as we heard in the royal commission on banking, this is because advisers are in lock-step with companies that own retail products that deal almost exclusively in equities and won’t mention bonds.”
This led John to move away from a typical mix of equities and investment properties and into corporate bonds. John turned to FIIG Securities with the goal of finding a defensive selection of bonds with the aim of minimising risk of loss of capital. “I sold my share portfolio and investment properties with the express intent of converting it to bonds”.
John relates his experience with bonds to his experiences as a medical specialist. “I expected that the parents of the child whom I was seeing as a patient would listen to what I had said and do what I’d recommended after suitable discussion and explanation. This was a mutual given”.
“When the GFC hit, I felt that I’d been let down by the lack of prior warning of the consequences to the global equities market.”
This model of reciprocity applies to John’s relationship with FIIG Securities Director, Ben Taylor. ”Ben is highly experienced in financial matters, and I greatly respect his expertise as well as his attention to the details of my portfolio."
Since first working with FIIG, John and Frøydis have placed their faith in the stability of corporate bonds. However, despite this approach John still sees diversity as being central to his investment philosophy. “All the funds in our family self-managed super are in bonds, which are themselves spread over a range of industries, but with the underlying predicate of safety.”