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My question is on hybrids. Is it true that ASIC now believe these to be classified as Australian Equities? I completely agree with Paul’s comment to classified them as fixed interest and bonds (eg: new NAB issue). However, reports from places like BT Wrap classify them as equities. Where is the basis for this change of classification? I know they have equity like characteristics but if I were to classify them now as equities I would be outside my investment strategy.
A: Thank you for the question.
Even if they did, I wouldn’t take too much notice of this because I don’t agree and I don’t think it is their role.
It could be that BT, in its classification, has listed them this way. A number of the broking systems (such as CommSec) do this, as they get picked up under an ASX stock code that classifies them as a preference share.
If you are worried about this, I would just amend your investment strategy to say that you will include hybrid securities as part of your fixed interest weighting.
