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“Blue chip equities offer growth, but in 2025 we’ve seen growing appetite for predictability and preservation,” says Marios Anastasiou, CEO of ARC Capital Venture. “For sophisticated investors, especially those in or approaching retirement, global fixed income has become a compelling alternative.”
Equity Market Volatility vs. Bond Market Resilience
This year, the ASX 200 index has delivered modest growth and consistent dividend payments, but it hasn’t been without turbulence. From mid-year dips to ongoing uncertainty around interest rate policy, equity investors have had to stomach significant drawdowns—even when returns have remained positive.
In contrast, ARC Capital clients who have integrated global fixed income securities—like bonds issued by Berkshire Hathaway Energy Company—have enjoyed consistent income with far less market volatility. Berkshire’s fixed-rate bond issued earlier this year offers a 6.75% coupon, backed by one of the world’s most stable and well-capitalised utility companies. With investment-grade ratings and a five-year maturity, these bonds are drawing considerable attention from income-focused investors looking to reduce risk exposure.
“Our clients want to know that their portfolio can still generate meaningful income even in flat or down equity markets,” Anastasiou explains. “That’s where these fixed income positions are proving invaluable.”
Lloyds Bank Bonds: AUD-Denominated Stability
Another standout performer for 2025 has been the Lloyds Bank PLC fixed income issuance. Offering a 7.25% yield and denominated in Australian dollars, these bonds provide an added layer of convenience for local investors looking to avoid currency risk while accessing a globally recognised financial institution.
Lloyds has long been a pillar of British banking, and its debt securities are supported by a strong balance sheet, diversified loan book, and stringent regulatory oversight. The fact that investors can access this level of credit quality—with income paid monthly or quarterly in AUD—is a rare opportunity.
“These aren’t speculative plays,” notes Anastasiou. “They’re core income assets for clients who are serious about risk management.”
Evaluating Total Return, Not Just Yield
One of the most common mistakes investors make when comparing bonds and equities is looking solely at raw return. While the ASX can offer capital growth and franking credits, it also comes with higher volatility and no guarantee of income continuity. Dividend cuts, share price fluctuations, and macroeconomic headwinds can all eat into an investor’s total return.
With fixed income, the proposition is different. The yield is known, the capital is returned at maturity, and the volatility is far lower. In 2025, many bonds on ARC Capital’s desk are offering yields between 6%–7.5%—levels not seen in over a decade, particularly from investment-grade issuers.
“Our view is that return should always be evaluated in terms of risk taken,” says Anastasiou. “Fixed income isn’t just safer—it's also providing better Sharpe ratios this year than many equity indices.”
Who Should Consider Bonds Over Stocks?
While ARC Capital advocates for diversified portfolios, we also recognise that different asset classes serve different investor goals. For younger investors with long time horizons and high risk tolerance, equities—including ASX blue chips—can still provide growth and income potential. However, for those nearing retirement or already drawing income from their portfolios, the priorities shift.
“Preserving capital, reducing volatility, and generating consistent income become far more important once you're in the decumulation phase,” Anastasiou explains. “Bonds from issuers like Lloyds Bank or Berkshire Hathaway Energy are specifically designed to meet those needs.”
These securities are especially popular among SMSF trustees, family offices, and private investors who want to align their investments with specific income targets or liability management frameworks.
Positioning for 2026 and Beyond
The macroeconomic outlook remains uncertain. Inflation is easing, but rate policy continues to shift. Equities are pricing in both optimism and risk, while the bond market is finally offering attractive yields without compromising credit quality.
ARC Capital Venture believes that global fixed income will continue to play a central role in investor portfolios heading into 2026. Access to corporate bonds from high-quality issuers—across financials, utilities, and government sectors—is no longer limited to institutions.
“Retail and SMSF investors now have the opportunity to access the same investment-grade issuers as pension funds and sovereign wealth managers,” says Anastasiou. “That’s a transformational shift in portfolio construction.”
Final Thoughts
In 2025, the gap between stocks and bonds is narrowing—not because equities have become less attractive, but because bonds have become far more competitive. For many Australian investors, especially those prioritising income and stability, this is the moment to re-evaluate core allocations.
By adding names like Lloyds Bank PLC and Berkshire Hathaway Energy to portfolios, ARC Capital clients are diversifying risk while locking in strong, predictable income in a market where certainty is in short supply.
“Every investor’s journey is different,” concludes Anastasiou, “but the tools to build better outcomes are available now—and fixed income is leading that charge.”
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