Liquidity, the Budget, an Election and Trade Wars 

Debt Investing Amidst Market Uncertainty

Debt investments offer a unique advantage: predictable returns, unlike most other assets whose value fluctuates based on market sentiment which can be unpredictable. Recent market volatility, driven by global events and economic uncertainties, amplifies investor anxiety.

Liquidity and Investment Timing

Liquidity can be useful, primarily for seizing new opportunities. The secondary purpose is capital preservation, even at low cash-rate returns. However, studies show investors often underperform market indices due to poor timing in defensive manoeuvres and re-entry.

Navigating Fixed-Rate Bonds and Seeking Stability

While fixed-rate bonds are often recommended during economic uncertainty, they introduce volatility, requiring precise timing for gains. This is more akin to trading than long term investing.

iPartners' Alternative: Stable Returns with Liquidity

iPartners provides investment solutions designed for stability in volatile markets, offering alternatives to low-yielding cash investments. These include:

• Short-term Income Fund: Offering well above cash rate returns and weekly liquidity.
• Bond Income Fund: Comprising market-tradable, overwhelmingly investment-grade assets.
• Core Income Fund: Focused on absolute returns and senior secured loans with short average maturities (1.2 years).
• Credit Investment Fund: Delivering higher yields with reduced property risk and short average maturities.

Addressing Liquidity Concerns and Building Trust

Market turbulence and fund manager scrutiny heighten liquidity concerns, which become a proxy for trust. However, hoarding cash leads to diminished returns.

A Strategy for Stability and Growth

Diversified portfolios with short maturities offer stability amidst market volatility. While equity market fluctuations are common, taking interest rate risk in fixed-rate bonds is inherently speculative. Opting for a cash-rate-linked portfolio prioritizes capital preservation.

Responding to Economic Uncertainty with Strategic Investment

Recent economic news, including potential interest rate adjustments due to economic softening or inflationary trade tensions, underscores market volatility. The Budget due on March 25 will likely comprise high spending and a need to issue vast amounts of bonds to fund it. The global Trade War seems to be just kicking off bringing higher prices globally. The downsizing of government saves money but leaves thousands unemployed and on benefits. The May Australian election sits in the background but as the date gets closer, promises balloon and the prospect of a minority government means pandering to minorities. The temptation to disengage from investment aims is high.

In this environment, contracted returns from well-structured debt investments offer a less volatile path to wealth generation. If liquidity is needed, use it to improve your portfolio, rather than resorting to unproductive cash holdings. Creating a stable structure where the underlying investments are aligned with portfolio aims should not require investors to set their sights too low.