Coffee Catch-Up Meet Luke Hunter
Read excerpts from our Q&A below:
Hi Luke!
Thank you for having coffee with us!
We hope the Melbourne office is treating you well. We’re absolutely delighted to have you join us here. To start, could you share a bit about yourself and shed light on your current role within the company?
My current role is as an associate in the Capital Markets team, I’ll be working very closely with private clients and financial advisors by aiding with their fixed income investments and building long lasting professional relationships.
Given your time in the fixed income world, could you share some common misconceptions you’ve encountered? We’re keen to hear your perspective, especially given your background.
1. ‘Bonds are complex and hard to understand’
Bonds are among the simpler types of assets. They begin and end at a value of $100 (par), with the bond’s price fluctuating over its term. During the bond’s term, you’ll receive periodic coupon payments. Fixed-rate bonds pay interest twice a year, while floating-rate notes pay quarterly. The coupon on a fixed-rate bond remains fixed, whereas a floating-rate note’s coupon varies and adjusts according to the 90-day bank bill rate.
2. Bonds must be held until maturity.’
Investors can sell their bonds at any point during the bond’s term, with the sale typically completed the same day and the cash available within 2 business days.
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Let’s dive deeper into your expertise and how you operate within the ever-changing financial markets:
On a more personal note, do you have an investment mantra or guiding principles that shape your approach in this ever-evolving field? How do you stay informed and continue learning in such a dynamic landscape?
When you have a clear understanding of an investment, you can more effectively evaluate its risks and potential rewards. Following Warren Buffett’s timeless advice to “never lose money,” sticking to what you comprehend helps mitigate unforeseen losses. Conversely, venturing into unfamiliar territory may lead to emotional decisions, especially during market volatility. By grasping the investment, you reduce the likelihood of impulsive choices driven by sentiment.
Now, for a bit of fun: What are your favourite bonds, and why? Feel free to share two that stand out to you and tell us what makes them special in your eyes.
The first one must be the inflation-linked bond (ILBs) issued by Sydney Airport in 2006 and has a maturity in 2030. Corporate ILBs are rare breed nowadays as we haven’t seen an issuance since 2008. Inflation-linked bonds are designed to have returns or cashflows that are tied to inflation rates. These securities include a return component that is influenced by a specific index, such as the Consumer Price Index (CPI) or inflation rate.
For instance, when inflation increases, the principal value of the ILB will increase proportionally with the CPI. Therefore, as the CPI fluctuates, the value of the bonds will adjust accordingly.
This provides investors with a direct hedge against inflation, which not only protects their wealth from the affects of inflation but also preserves and grows it!
Next is the Westpac 7.199% bond, callable in 2033 and issued in 2023. Issued by a major bank with an A- credit rating, this bond offers a fixed return of 7.199% for 10 years—what more could you ask for? Investors who purchased it at issuance have seen its price surge significantly. An excellent income producing, defensive, strong asset.
Shifting gears to the personal side, we’re curious to know more about the person behind the professional.
You recently returned to Australia after some solo traveling around Southeast Asia. Were there any highlights on your journey, and do you have any recommendations?
One of my favourite activities, which I realise is uncommon for people my age, is solo travel. I recently completed a 3-month solo journey through Southeast Asia, visiting four countries. This experience was a profound opportunity for self-discovery and enhanced my independence and resilience. It pushed me out of my comfort zone, leading to life-changing adventures, introspection, and reflection, and giving me a deeper sense of purpose and fulfilment. Navigating new places on my own boosted my confidence and self-esteem, while overcoming challenges independently strengthened my sense of capability and adaptability.
Vietnam stands out with its incredibly friendly people, affordable and delicious healthy food, and fantastic coffee! I highly recommend beginning your journey in southern Vietnam and traveling north. My top tip for anyone is to buy a one-way ticket to any destination and embrace the adventure—let life take you wherever it may lead!
Most importantly, how do you strike a balance between your professional commitments and personal interests to ensure your overall well-being?
When I’m not working, you’ll usually find me at the gym or going for a run. My favourite way to unwind and ground myself is by running after work. Evening workouts help clear my mind, and I notice a significant boost in concentration and productivity the following day.
