5 Advantages Of Investing In Wholesale Bonds

Bonds are traded in two ways, wholesale and retail. Wholesale bonds are debt securities that can be sold to wholesale investors or clients at the time of issue as mentioned in the Corporations Act 2001. This can be done on the basis that all the appropriate disclosure documents are prepared and provided to the investors according to the act. These bonds trade in the OTC (over-the-counter) market, unlike retail bonds that are traded on an exchange market. Investors need a minimum investment amount of $250,000 to invest in these bonds. However, there are various types of bonds available and people should research them before investing.    

 

Planning to invest in wholesale bonds? Here are a few advantages of investing in it.

 

  • Diversification

            Gaining access to a wider range of bonds available in the market is quite beneficial for the investors as they could diversify their portfolios. Wholesale Bonds provide the investors the opportunity to diversify their investment allocations. This is done by providing the company with a huge number of issuers and investors with investment opportunities. People are allowed to invest in bonds across the globe while entering different country markets. This reduces the chances of incurring losses and exposes the investors to more opportunities in return.

 

  • Secondary market liquidity

Wholesale bonds offer the investors liquidity, allowing them to trade these bonds in the Secondary Market. There is no penalty fee charged while exiting unlike endowments or fixed deposits with pre-termination clauses. However, the investor would not receive the coupon payments for the rest of the bond's tenure and will be returned the principal amount on his or her exit. The liquidity of these bonds is based on the market and the availability of buyers and sellers.


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