Summary: A new study from QUT offers a warning on investor attitudes to hybrid securities. Participants were tested to reveal behavioural biases and risk attitudes, then asked to allocate bonds, hybrids and shares to an investment portfolio. Participants who had an illusion of control or an over confidence bias allocated more hybrids to their portfolios than others. Participants acknowledged poor knowledge of hybrids, but this did not deter them from buying the securities.
Key take out: The findings appear to confirm ASIC's fear that retail investors are attracted to the appearance of secure, steady, “bond-like” returns from hybrids.
Key beneficiaries: General investors. Category: Hybrid securities.