The fixed income asset class is witnessing a consistent increasing interest from SMSF investors, according to a specialist fund manager.
“We’re constantly seeing more demand for our offerings from SMSFs,” FIIG Securities head of intermediaries Simon Michel told selfmanagedsuper.
Michel pointed out the trend bodes well for the fixed income individually managed account (IMA) FIIG now has in the market, a product he believes is a good fit for SMSFs.
“They’re very much involved in the portfolio construction aspect and as they get comfortable with the asset class their attitude is ‘I now know what is happening, I want to go and really enjoy my retirement now and go on that holiday and transition to the IMA so I won’t have to worry about it day in day out’,” he noted.
“SMSF members are very self-educated and they want to understand what they’re investing in, how the market is working and they are looking for a differentiation.
“They want more transparency, more involvement and more control and more autonomy over their investments as well [which is what the IMA can provide].”
He predicted the appeal of fixed income investments, in particular direct bonds, would continue as SMSF trustees transitioned to retirement and gave the preservation of their capital a higher priority.
FIIG’s philosophy behind its fixed income IMA was to open the market up to a broader range of investors by giving them more variety and more diversification within the asset class, while making investment in it easier, he said.
“With the IMA structure you get the traditional benefits of an IMA of control, autonomy and transparency, but also gain the benefit of direct bond ownership,” he added.
Due to the nature of the direct bond market not allowing investors to buy $100 parcels, FIIG has set the minimum investment amount for its fixed income IMA at $250,000.
“That is to ensure the investors we’re working with that access the global bond market are able to generate the greatest value through diversification,” Michel said.