Potential benefits of investing in hybrids
Some of the reasons investors may choose to invest in hybrid securities include:
- the potential to receive an income stream for a pre-determined period, although the certainty of cash flows varies depending upon the hybrid structure
- typically higher interest rates than paid on bonds, with the higher interest rate reflecting the higher risk profile of hybrids
- diversification, and
- the potential to benefit from anticipated movements in interest rates or equity prices