Share
5,080 Posts.
lightbulb Created with Sketch. 2
clock Created with Sketch. 30/09/17
18:59
Share
Originally posted by Mark F
↑
As a holder of SVWPA and MXUPA which are perpetual floating rate hybrids I am thankful I didn't buy at face value ($100) but rather at a more attractive approx $75 in both cases which increases the yield by about 33% - currently around 7-8% based on purchase price. I see them as an analog of a term deposit but at a much better interest rate albeit with more risk but also a potential for a decent capital gain if redeemed. The rate floats with the cash rate so is largely immune from the issue of being caught in a rising interest rate cycle. Because of the known redemption price but undefined redemption date I would never pay more than the face value as it is an almost guaranteed capital loss.
Expand
Yes, some hybrids cost more than the issue price because of their attractive margin. Even allowing for a capital loss it could be a good return especially if there are franking credits.
