Question 1: I watched your masterclass on fixed interest with great interest, particularly the segment on hybrids. As I’m a security holder with Suncorp, I’ve received a prospectus for their Suncorp Capital Notes 3. Are these in any way similar to the Commonwealth PERLS XII hybrid?

Answer (by Paul Rickard): Yes, almost identical. Same fixed distribution margin of 3.0% over the 90 day bank bill. Term (to both call date and exchange date) is approximately 1 year shorter. The securityholder offer closes on 12 December.

Question 2: Is it a good idea to invest more in all the major banks at this share price? Or do I need to wait to get a clearer picture on banks, fines and profits.

Answer (by Paul Rickard): I think there is some value in Westpac at the current price, and the share purchase plan provides existing shareholders with a way to do this at a 2% discount. I don’t, however, expect any immediate re-rating.

Commonwealth Bank, which is benefitting from a “bank flight to safety” is expensive at over $81.00. There is uncertainty around ANZ’s capital position due to action by the New Zealand regulator, while there are also some concerns regarding NAB and a disclosure about AUSTRAC issues.

Question 3:  Thank you for your Income and Growth portfolios this year. I have been more than happy with my returns based on these portfolios. My questions are – will you be resetting both portfolios, when do you think that will be and do you expect major changes?

Answer (by Paul Rickard): I will re-set the portfolios at the start of 2020. There will be some re-balancing, but I don’t expect major changes. Perhaps a little more defensive orientation.