Tuesday 05 April 2016 by FIIG Securities clock Opinion

Deposit market – Forces at play

In this important white paper, FIIG expert Elizabeth Moran discusses how investors should adjust their deposit strategy in the coming year

In this new white paper, Diversifying your Portfolio in the Deposit Market, Elizabeth Moran explains how investors can get the most from the cash and term deposits in their portfolios.

Moran argues that most investors are likely to increase their allocation to cash and term deposits in the immediate future as they seek to protect their portfolios from economic uncertainty and rising volatility in financial markets.

For this reason, it is crucial to get the cash component of your portfolio right.

After reviewing recent trends in the term deposit market, Moran discusses opportunities in the coming year, the advantages of longer terms, as well as higher yielding alternatives to consider such as Floating Rate Notes.

You can download the full PDF using this link.

An extract from the seven page document is below.  

The year in review    

What a difference a year makes! Low overseas borrowing rates for the major banks meant they had virtually withdrawn from the term deposit market last year. The prospect of higher deposit rates for investors was dim.

Two cash rate cuts during the year and even lower rates on offer, sent investors seeking higher returns in other asset classes. Roll forward 12 months and it’s a different story:

  • The cost for the majors to tap into the global bond market has increased and the term deposit market is again starting to look like an attractive place to raise funds. Two major banks are active and rates are moving higher
  • Lower Chinese growth, commodity prices, global stock market declines and volatility has put more emphasis on capital preservation for investors and funds are flowing back into deposits

While cash should be a component in every portfolio, views on the amount to hold differs wildly.


Download Deposit market - Forces at play