Fixed income
Balanced investing: mix bonds and bold asset plays
With valuations having outpaced fundamentals within equity markets both locally and offshore - after recently hitting new highs - investors may wish to revisit the merits of low-risk fixed income as a boring, yet safe counterpoint to riskier assets, notably shares. In the United States, JP Morgan has cut second quarter consensus earnings forecasts from 11% year-on-year at the start of 2025 to 3.5% year-on-year today, leaving second quarter consensus forecasts outright lower than what was delivered in the first quarter. Closer to home, the ASX earnings season – which officially kicks off early in August - is also expected to be a much more muted affair. Despite the ASX 200 trading at near record levels, FY25 is looking down the barrel of a 1.4% fall in total earnings for the index, which would mark the third straight year profits have gone backwards.Does fixed income look more compelling?Given the sheer weighting of the Commonwealth Bank of Australia (ASX: CBA) on the ASX’s main board – any unravelling of its current extreme over-valuation – with forecast price to earnings (PE) over 31 times equivalent to an earnings yield of just over 3% per annum – the main index looks primed to struggle. Meanwhile, with the entire ma
Income hunt lifts mortgage funds, but risks also rising
With falling interest rates compromising fixed income returns and bank hybrids gradually being phased out by 2032, income investors have a greater appetite for asset-backed investments offering regular income, capital protection, and an uncomplicated risk profile. Given that equities remain volatile and commercial property still faces headwinds, it’s hardly surprising that more investors are turning to the often-overlooked mortgage funds sector. Far from being rocket science, mortgage funds allow investors like you to pool capital, which is then lent, typically secured against real estate to commercial borrowers like developers. You will earn interest on those loans knowing that when it comes to the repayment waterfall [redemptions] you rank ahead of equities. With flexibility across pooled and contributory structures, mortgage funds can also offer greater liquidity than traditional property trusts. For example, some pooled funds offer redemptions every 90 days or monthly.Transparency and disciplined lendingBut while that can be a game-changer for income-focused investors, Ben O’Hara, executive director at GPS Investment Fund is quick to warn investors to look for mortgage fund providers offering both transparency a
Surgeons' incomes remain a cut above the rest: ATO
Holding not just your life in your hands, surgeons also grab a large share of our money, according to the latest data. These highly-skilled medical specialists remained the highest earning Australians with an average income of $472,475 in 2022/23, according to the Australian Taxation Office’s (ATO) Individuals statistics for Taxation statistics 2022–23. They beat their operating table allies, anaesthetists, who earned $447,193, with financial dealers ($355,233) third. Other members of the medical profession also ranked highly with internal medicine specialists, psychiatrists and other medical practitioners listed in the top 10. This was in a period when the average taxable income was $74,240 as men ($86,199) out-earned women ($62,046). However the ATO showed a degree was not required for a higher pay packet with drillers, miners and shot firers earning the biggest salaries without going to university. They earn an average salary of $133,873 per year, according to a Yahoo Finance article. Train or tram drivers were in second place with average earnings of $132,938 while electricians and distribution trade workers rounded out the top three with $128,851. But most of these workers needed technical qualificatio
Slowest quarterly wage growth since March 2022, now 0.7%
Australian Bureau of Statistics (ABS) data shows wage growth in Australia has decelerated to 3.2% over the past year. Wage growth slowed to just 0.7% in the December quarter, the slowest quarter since March 2022. This deceleration was forecast by the Reserve Bank of Australia (RBA), and the latest data confirms their prediction.Credit: ABC / ABS"The outlook for wages growth and inflation is sensitive to our assessments of the degree of balance between aggregate demand and supply in the economy and in the labour market; however, these assessments are subject to considerable uncertainty. Our central assessment is that the labour market is still tight, while the broader economy is estimated to be closer to balance," the RBA said in a release. Based on the latest RBA forecast, published earlier this month, the Wage Price Index (WPI) growth in December is expected to slow to 3.2%. Michelle Marquardt, ABS head of prices statistics said: “The 0.7% rise this quarter was the equal lowest growth since March quarter 2022. At 3.2%, the annual increase in wages was down from 4.2% in December quarter 2023 and is equal to the lowest increase since September quarter 2022.” Earlier this week, the RBA cut interest rates for the first