Hybrids: Why take bond returns for equity risks?

The success of some hybrid issues suggests investors must not understand the risks – and there is no upside.

PORTFOLIO POINT: Hybrid issues, like those made by ANZ and Origin Energy last year, contain some high-risk features for retail investors.

Through February and March this year, approximately $5.0 billion of hybrid or subordinated debt securities were offered to retail investors. The offers were made by Tabcorp, ANZ, Westpac, Colonial Finance, AGL Energy and Insurance Australia Group.

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