The survival guide to income investing – AFR

In a world turned upside down by a near-zero cash rate, minuscule bond yields and hyper government stimulus due to COVID-19, we highlight yield opportunities you may not have thought of.

Campbell Dawson, co-founder of Elstree Investment Management, a leading hybrid investor, says the hybrid market is fully valued. “There are not a lot of cheap hybrids at current prices. However, the average yield on hybrids is attractive compared to cash and bonds.”

His colleague, Norman Derham, says Elstree is considering launching an exchange traded product version of the Elstree Enhanced Income Fund on the Chi-X Australia exchange. “It makes sense to invest in hybrids through a managed fund rather than buy one or two hybrids directly. This is an under-researched market that professional investors can extract extra income from.”

The Elstree Enhanced Income Fund returned about 8 per cent over 12 months to end-December 2020. The fund invests in 15-40 hybrids and is aimed at investors who want a higher return than bank term deposits and less yield risk than investing in Australian shares.

Read the full AFR article here.