Learning about shares: Few nasty surprises in fixed interest market

Tuesday 20 April 2004

Barbara asks: We touched on debt securities a couple of weeks ago when we talked about asset allocation. I'm interested in learning about how they work. Can you tell me more?

Dan Dividend responds: Debt (or fixed interest) securities - despite often being viewed as the rather conservative cousin of shares - are a big part of the investment world. At last count there were

By The Landlord

72 securities listed on NZX's debt market, the NZDX.

You can use debt securities to provide diversification in your portfolio as they have different risk and return characteristics to shares, so they tend to move in different cycles.

So what are debt securities?

As we touched on a couple of weeks ago, companies issue debt securities for sale to raise money to fund growth, in much the same way as they issue shares. It's not just companies in this business either - the Government also has debt securities listed on the NZDX.

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