EasyEquities announced the launch of South African government bond investments, which some experts say is a game-changer that will boost the platform’s assets under management.
Bonds are an attractive asset class for investors looking for a stable yield, as they guarantee a return over a set period.
Bonds promise to repay a principal amount at a future date and offer predictable cash flows through predefined coupon payments, typically twice a year.
“They’re renowned for stability and lower risk compared to other assets, making them potentially an excellent addition to your investment portfolio,” EasyEquities explained.
“With an inverse relationship to interest rates – when these are high, bonds are cheaper – now may be a good to check them out.”
EasyEquities said bond market participation was traditionally reserved for the exclusive few due to large ticket sizes and barriers for smaller investors.
However, the investment platform said it is changing the game through its unique pricing mechanism.
“Our initial offering spans various maturities, from 3 to 25 years, currently providing yields between 8.9% and 12.3%,” it said.
It added that investors do not have to worry about liquidity. “Our chosen bonds ensure a smooth experience on the EasyEquities platform in your ZAR wallet,” it said.
David Eborall, portfolio manager of the SaltLight worldwide flexible fund, said the EasyEquities government bond product will change the South African market.
Eborall explained that most brokerages don’t offer government bonds because they can’t handle the custody and pricing.
“In South Africa, it is very hard for investors to access duration fixed-income instruments like bonds,” he said.
With South Africa heading into the end of a rate increase cycle, Eborall argues that “it’s a no-brainer to buy duration fixed income at these yields”.
“If I had to bet, EasyEquities is going to raise billions of assets under management from this product from older income-focused investors,” he said.