Because bonds behave independently from equities, adding fixed interest investments to a portfolio can improve its overall diversification. Fixed interest securities expand the opportunity of investors to participate in the performance of capital markets and provide a more reliable source of income than other asset classes.
Relative performance in fixed interest is largely driven by two dimensions: bond maturity and credit quality. Bonds that mature farther in the future are subject to the risk of unexpected changes in interest rates. Bonds with lower credit quality are subject to the risk of default or changing perceptions of risk. Extending bond maturities and reducing credit quality increases potential returns.
The Short Term Fixed Interest Trust invests in high credit quality, Australian dollar denominated domestic securities with a maximum maturity of 2 years. The Trust's weighted average maturity target is 1 year.
DFA Australia launched both the Global Bond Trust AUD class and the Global Bond Trust NZD Class in 2011 to provide investors with a highly diversified global fixed interest strategy designed to deliver broad global bond market returns.
Relative performance in fixed interest is largely driven by two dimensions: bond maturity and credit quality. Bonds that mature farther in the future are subject to the risk of unexpected changes in interest rates. Bonds with lower credit quality are subject to the risk of default or changing perceptions of risk. Extending bond maturities and reducing credit quality increases potential returns.
Australian Fixed Interest
DFA Australia launched the Short Term Fixed Interest Trust in 1999. It is designed to provide liquidity and dampen overall portfolio volatility.The Short Term Fixed Interest Trust invests in high credit quality, Australian dollar denominated domestic securities with a maximum maturity of 2 years. The Trust's weighted average maturity target is 1 year.
Global Fixed Interest
DFA Australia launched the Five-Year Diversified Fixed Interest Trust AUD class in 2001 and the Five-Year Diversified Fixed Interest Trust NZD class in 2004. The Two-Year Diversified Fixed Interest Trust was launched in 2005. These strategies are designed to provide liquidity and dampen overall portfolio volatility. The Two-Year and Five-Year Diversified Fixed Interest Trusts invest in high credit quality domestic and global fixed interest securities hedged to the Australian dollar with a maximum maturity of 2 years and 5 years respectively. The Five-Year Diversified Fixed Interest Trust NZD class is hedged to the New Zealand Dollar with a maximum maturity of 5 years.DFA Australia launched both the Global Bond Trust AUD class and the Global Bond Trust NZD Class in 2011 to provide investors with a highly diversified global fixed interest strategy designed to deliver broad global bond market returns.