Hybrids have delivered uncorrelated high returns combined with low volatility over the past five years. This paper explores why, despite some changes in the return equation, their reduced risk and still healthy returns make hybrids one of the most compelling income sub-sectors.
Topics addressed:
- The Australian hybrid sector defined
- The return equation
- Portfolio construction benefits
- The risks - default risk, event risk, interest rate and margin risk, liquidity
risk
Campbell Dawson is Managing Director of Ellstree Investment Management.
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