Bonds A Solid Choice Amid Uncertainty
Finweek English|25 June 2020
Investors can now lock in bond yields at double the rate of cash returns.
Leon Kok
Bonds A Solid Choice Amid Uncertainty

It goes without saying that the objective of any intelligent investor is to maximize their capital by earning the highest returns that they can get over the longest period possible. The general view is that equities are preferable to bonds or cash equivalents because of their riskier nature and that they offer the highest possible returns.

And as bonds are traditionally considered safer investments than equities, the rate of return offered by them is typically lower. But some bonds (high-yield bonds) may offer exceedingly high rates of return. In the case of junk bonds, for instance, they could yield returns as high as 50% per year, the catch being that they carry extremely high risks of default.

Appropriate allocation of portfolios to these classes is currently being debated both globally and in South Africa. The contrasts between our markets and many elsewhere are considerable. Indeed, it’s not all a straight line.

The dilemma of choice in SA has been brilliantly explicated by Philip Bradford, manager of the Sasfin BCI Flexible Income Fund. He drew from Aesop’s fable, The Tortoise and the Hare’s, seemingly moralistic propaganda.

Slow and steady is a good approach, he says, but in real life, few would bet their money on the tortoise against the hare. On the other hand, the fable comes into its own where ‘getting to the finish line’ is far more important than ‘getting there as fast as possible’.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the {{IssueName}} edition of {{MagazineName}}.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM FINWEEK ENGLISHView all
THE HEALTH OF SA'S MEDICAL SCHEMES
Finweek English

THE HEALTH OF SA'S MEDICAL SCHEMES

As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.

time-read
7 mins  |
5 November 2021
The effect of Gilbertson's departure
Finweek English

The effect of Gilbertson's departure

With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.

time-read
3 mins  |
5 November 2021
Making money from music
Finweek English

Making money from music

Why investors are increasingly drawn to the music industry.

time-read
3 mins  |
5 November 2021
Conviction is key
Finweek English

Conviction is key

Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.

time-read
5 mins  |
5 November 2021
The post-pandemic toolkit
Finweek English

The post-pandemic toolkit

How CFOs can use technology to support growth.

time-read
4 mins  |
5 November 2021
Big city living exodus
Finweek English

Big city living exodus

Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.

time-read
3 mins  |
5 November 2021
Big compact, big value
Finweek English

Big compact, big value

Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.

time-read
3 mins  |
5 November 2021
On barriers to entry
Finweek English

On barriers to entry

There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.

time-read
2 mins  |
5 November 2021
Fear and greed in one index
Finweek English

Fear and greed in one index

To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.

time-read
3 mins  |
5 November 2021
Africa's largest data centre facility coming soon
Finweek English

Africa's largest data centre facility coming soon

Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.

time-read
3 mins  |
5 November 2021