Hybrids and bank shares

Print This Post A A A

Question 1: Are hybrids a good investment and how safe are they for your self managed super fund as they pay a better interest rate than term deposits?

Answer (By Paul Rickard): Firstly, I don’t think of hybrids as a “share” – I think of them as a floating rate “corporate bond” or an “interest rate security”. As the interest rate is re-set every three months, it is a bit like investing in a “corporate” term deposit that is rolled over every three months.

So, the question of whether they are a “good investment” means (for me) are they good compared to a term deposit, or a corporate bond?

Also from this edition