Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 315

Welcome to the Firstlinks Edition 315

Welcome to the Firstlinks Edition 315
Graham Hand

Graham Hand


If you want to know what financial markets absurdity looks like, here is a screenshot from a Bloomberg terminal for a bond priced last week. It shows:

  • Issuer: Bundesrepublik Deutschland (Federal Republic of Germany)
  • Maturity: 15 August 2029 (10 years)
  • Coupon: 0.000000% fixed (zero, zip, zilch, nada ... any way you cut it)
  • Issue Price: 102.64 (yes, pay 102.64 now and receive 100 in 10 years)

Don't bother checking your bank account on each interest date. The yield-to-maturity on this bond is minus 0.26% for 10 years, and you're worried about term deposit rates of 2%!


Source: Bloomberg

It brings back memories of when I did the first-ever zero coupon Australian dollar Eurobond issue for the Commonwealth Bank back in December 1989 (the three Number 1 hits of that month were by Phil Collins, Billy Joel and the infamous Milli Vanilli). However, there is one massive difference over 30 years. The issue price of our bond was $55, with $100 repaid in five years. No wonder it quickly sold out to tax-avoiding 'Belgian dentists'. Yield-to-maturity, 12.7% pa. Those were fun days, traveling the world with a AAA borrower in my pocket.

Many investors think of the listed market to buy company shares, but in recent years, the ASX has introduced a wide range of ETFs, LICs, LITs, notes and hybrids to meet fixed interest demand. While these do not have the security of a government-guaranteed term deposit, we review some listed investments that can meet income needs without equity risk. See also the excellent comment by bond expert, Warren Bird.

Continuing from last week's 'gone viral' article on fund managers failing, Rudi Filapek-Vandyck shows the big winners and losers among large cap stocks, which explains why so many professional investors had poor years. 

We are only beginning to learn how the Internet-of-Things (IoT) will use real-time data to drive decisions, and MFS International explains how it will change companies and consumers.


The debate on franking heightened investor awareness of the benefits, which may encourage some to chase franking at the expense of other factors. Raewyn Williams issues a warning.

The latest Investment Trends/Vanguard Reports on SMSFs show changes in asset allocation and potential for substantial movements between different types of super vehiclesGraeme Colley then gives another five common mistakes he sees in SMSFs.

After the high drama of the World Cup Final, Benjamin Chong uses a cricket analogy to explain taking a swing in Venture Capital. It just needs one big winner. And while on the subject, I sat up until 5am watching the final in a nine-hour emotional rollercoaster. It was also fascinating watching real-time betting, as New Zealand started at $3.50 outsiders, gradually clawed their way to $1.50 favourites, then blew out to $6 during the super overs.

For all those people arguing about 'decisive' moments, 'decisive' means 'producing a definite result'. This photo shows the only decisive moment of the entire game, although the Kiwis were desperately unlucky. Have Your Say if you wish to comment on this extraordinary sporting event.




This week's White Paper from BetaShares is the 2019 Half-Yearly Review of the ETF sector, showing which types of funds are in inflow and outflow and which performed the best. IIR's Monthly Report on LICs highlights recent mergers, issues, option exercises and activity.

Graham Hand, Managing Editor

 

For a PDF version of this week’s newsletter articles, click here.

 


 

Leave a Comment:

banner

Most viewed in recent weeks

Simple maths says the AI investment boom ends badly

This AI cycle feels less like a revolution and more like a rerun. Just like fibre in 2000, shale in 2014, and cannabis in 2019, the technology or product is real but the capital cycle will be brutal. Investors beware.

Why we should follow Canada and cut migration

An explosion in low-skilled migration to Australia has depressed wages, killed productivity, and cut rental vacancy rates to near decades-lows. It’s time both sides of politics addressed the issue.

Are LICs licked?

LICs are continuing to struggle with large discounts and frustrated investors are wondering whether it’s worth holding onto them. This explains why the next 6-12 months will be make or break for many LICs.

Australian house price speculators: What were you thinking?

Australian housing’s 50-year boom was driven by falling rates and rising borrowing power — not rent or yield. With those drivers exhausted, future returns must reconcile with economic fundamentals. Are we ready?

Retirement income expectations hit new highs

Younger Australians think they’ll need $100k a year in retirement - nearly double what current retirees spend. Expectations are rising fast, but are they realistic or just another case of lifestyle inflation?

Welcome to Firstlinks Edition 627 with weekend update

This week, I got the news that my mother has dementia. It came shortly after my father received the same diagnosis. This is a meditation on getting old and my regrets in not getting my parents’ affairs in order sooner.

  • 4 September 2025

Latest Updates

Shares

Why the ASX may be more expensive than the US market

On every valuation metric, the US appears significantly more expensive than Australia. However, American companies are also much more profitable than ours, which means the ASX may be more overvalued than most think.

Economy

No one holds the government to account on spending

Government spending is out of control and there's little sign that Labor will curb it. We need enforceable rules on spending and an empowered budget office to ensure governments act responsibly with taxpayers money.

Retirement

Why a traditional retirement may be pushed back 25 years

The idea of stopping work during your sixties is a man-made concept from another age. In a world where many jobs are knowledge based and can be done from anywhere, it may no longer make much sense at all.

Shares

The quiet winners of AI competition

The tech giants are in a money-throwing contest to secure AI supremacy and may fall short of high investor expectations. The companies supplying this arms race could offer a more attractive way to play AI adoption.

Preparing for aged care

Whether for yourself or a family member, it’s never too early to start thinking about aged care. This looks at the best ways to plan ahead, as well as the changes coming to aged care from November 1 this year.

Infrastructure

Renewable energy investment: gloom or boom?

ESG investing has fallen out of favour with many investors, and Trump's anti-green policies haven't helped. Yet, renewables investment is still surging, which could prove a boon for infrastructure companies.

Investing

The enduring wisdom of John Bogle in five quotes

From buying the whole market to controlling emotions, John Bogle’s legendary advice reminds investors that patience, discipline, and low costs are the keys to investment success in any market environment.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.