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2022 Credit Outlook Reports

Inflation - Reversion to the mean - Headline inflation is surging after years of dormancy. Longer-term expectations should remain anchored, but the re-emergence of new variants runs the risk of extending some supply constraints in the short-term. In Australia, we believe inflation will be more subdued relative to global peers mainly because some factors that have strengthened headline inflation in the Northern Hemisphere--particularly energy prices and rents--are likely to be less pronounced locally.

Interest Rates - Turning off the liquidity tap - 2022 should herald the concluding phases of the end to ultra-loose monetary policies deployed by central banks since the onset of the pandemic. The Federal Reserve turns hawkish as inflation becomes increasingly ‘less-transitory’, but the central bank from Down Under remains steadfastly dovish…for now.

Foreign Exchange - RBA holds most of the cards - The Reserve Bank of Australia’s relatively dovish stance on interest rates is likely to be one of the main drivers for the Australian dollar in 2022, but an aggressive US Federal Reserve could also influence the local currency’s fortunes. If the RBA does not hike rates as markets are anticipating, or the US Federal Reserve signals an even tighter response, there is a real prospect of currency weakness, at least in the short-term but overall, would see more arguments in favour of a stronger Australian dollar throughout 2022.

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Build a diverse portfolio

from a wide selection of government, investment grade and corporate bonds

Defined and regular

income payments

High quality bond issuers

such as Commonwealth Bank and Woolworths through to high growth companies such as Zip and Omni Bridgeway

Access to our research,

investment strategy and portfolio construction expertise

Delivering income certainty throughout the year

Because a bond is a loan on fixed terms, you can expect regular and consistent income payments at set intervals during the year.

The bond’s performance is not tied to a company’s share price, so you can relax and focus on other things, rather than worrying about what the share market is doing.

This makes bonds a great investment when looking for a more secure option to directly investing in these companies through shares.

It’s a smart way to diversify

With bonds available from companies in industries as varied as banking, construction, infrastructure, insurance, transport, airlines, retailing and more, it’s easy to ensure diversification for reduced capital risk.

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Build a portfolio from a wide range of top Australian companies

Through FIIG’s DirectBonds Service, starting with a minimum of $50,000 you can get access to over 600 well-known Australian companies, providing you with consistent and reliable income payments and capital stability.

5.64% p.a.^{^}

Conservative Portfolio

This portfolio has 10 securities with weightings between 7.20% and 11.79%, yielding 5.64% pa*. It is designed for investors wanting a 100% allocation of investment grade bonds. The returns shown are based on ~$490,000 investment. $50,000 is the minimum amount that can be invested with FIIG.

6.62% p.a.^{^}

Balanced Portfolio

This portfolio has 16 securities with weightings between 3.38% and 10.22%, yielding 6.62% pa*. It is designed for investors wanting higher yield than a solely investment grade portfolio by taking measured credit risk. The returns shown are based on ~$565,000 investment. $50,000 is the minimum amount that can be invested with FIIG.

8.79% p.a.^{^}

High Yield

This portfolio has 17 securities with weightings between 4.10% and 9.16%, yielding 8.79% pa*. It is designed for investors seeking a higher return and who are comfortable with a corresponding increase in credit risk. The returns shown are based on a ~$470,000 investment. $50,000 is the minimum amount that can be invested with FIIG.

^{^}Pricing as of 6 September 2022. Subject to change.

Earn a better return

Australian bonds have proven to deliver better returns than cash or International shares over the last 20 years. And all without as much risk. If you’re looking for strong returns, bonds are a great way to achieve your aims.

Corporate Bonds generally pay a higher income return than cash and term deposits.

Source: Gross returns for 20 years to 30 June 2020. Vanguard Investments Australia Ltd

Access your funds at any time

Just like buying shares, you can trade your bonds if your situation or investment strategy changes. This can be done in parcels of $10,000 – allowing you flexibility without needing to trade everything (subject to availability)

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The Australian Leader in Fixed Income

At FIIG, our clients are at the centre of what we do. For over 24 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.

Who we are

600+

bonds available

6,000

Australian investors

1998

when FIIG was established

$5bn

of funds under advice with FIIG

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FIIG provides general financial product advice only. For a copy of our disclaimer please refer to fiig.com.au/disclaimer

Please be aware that Corporate Bonds have a greater risk of loss of some or all of your capital when compared to bank deposits.

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