In the last James Bond movie, the most famous secret agent is made to feel his age and question his usefulness.

A quick look at the bonds market in Australia may make some investors feel it has a lot in common with its Hollywood namesake.

Government and corporate bonds have been a mainstay of professional funds managers for as long as people have been investing collectively.

Typically though, Australian direct investors and Self Managed Super Funds (SMSFs) have found it had to get into this asset class.

That may be changing, thanks to the performance of more mainstream investments.

Potential capital gains from Australian real estate, after an astonishing 20 year bull run, are now in doubt, particularly in the apartment markets of Sydney, Melbourne and Brisbane.

The Australian share market has been trading sideways for 10 years. The All Ordinaries index today is at the level it first reached in 2006 and the returns from cash and term deposits are vanishingly small.

But corporate bonds are returning up to six per cent.

Nick Yaxley, head of research at fixed income advisory firm Bond Adviser, says the corporate bond market’s time has come. “Given the persistently low interest rate environment, term deposits are giving you 2.5 to 3 per cent, and corporate bonds are giving you 5.5 to 6 per cent.”

Retail and SMSF investors now have more avenues to invest in bonds. Investors can choose between fixed income exchange-traded.

According to FIIG, the fixed income specialists, the vast majority of bonds available are not traded through an exchange, but they are bought and sold “over-the-counter”.

This means that in order to buy and sell bonds, investors must find a broker who matches buyers and sellers in the market.

Fixed income brokers in Australia are licensed and regulated by the Australian Securities and Investments Commission (ASIC).

Australia’s retail bond market, although healthy, is under-developed compared with international bond markets, says FIIG.

Traditionally bonds were only accessible to institutional and corporate investors as minimum investment amounts were $500,000. Yet in other countries investors can buy bonds in $500 parcels and they are widely available much like investing in a term deposit.

FIIG provides investors with the opportunity to purchase Australian and international bonds in parcels starting from $10,000 (with a minimum portfolio balance of $50,000) through the Direct Bonds service.

This allows private investors to build their own portfolios, including SMSFs and individual accounts, according to their own risk and reward parameters.

Like 007’s favourite cocktail, it will leave the markets – shaken, not stirred.

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