Interest rate securities - also known as hybrids - are exchange-traded instruments that combine some of the features of equity securities with some of the features of debt securities. Typically, they more closely resemble a debt instrument at the time of issuance, but may convert into equity at a pre-determined time in the future, or if certain conditions are satisfied. It is important to understand that not all instruments have the same terms and conditions, therefore careful consideration of each security is recommended. Ord Minnett offers accessible, plain language summaries of key terms for each security under research coverage.
Interest rate securities can be a valuable addition to a portfolio where, for example, volatility in the equity market has increased an investor’s level of risk aversion. Alternatively, conservative investors grappling with low interest rates can incrementally improve expected returns by incorporating interest rate securities in their strategy. An Ords Adviser is well equipped to advise on the optimal approach for each client, and to determine the suitability of these instruments within a broader asset allocation.
Ord Minnett clients have had the opportunity to participate in most of the more than 30 initial public offerings of interest rate securities made over the last five years. Ord Minnett maintains solid, long-term relationships with a range of premium issuers. Advisers have the opportunity to meet with company management on a regular basis, and also have access to market-leading research.