One of the hot topics of the moment is finance companies - and how bad they are supposed to be. But let's get one thing straight here - not all finance companies are bad.

We are currently researching a story on fixed interest investing and it's good to get other views of what is happening in the market. Our goal is to provide something that is informative and balanced.

You could quite easily though, get the impression that finance companies and their secured debenture products are not a safe place to put your (or your clients') money. Such a myth is perpetuated by the likes of the ASB Bank and its recent survey.

The problem I have with the ASB research is that it looks like sour grapes. It's a competitor having a crack at another competitor.

I say this as the bank was happy to make sweeping statements but refused to provide examples to back up its position. (Maybe as publishers we should have handled the story differently?)

It is important not to generalise about any sectors and it is worth re-reading this piece from Broadlands Finance along those lines.

James Lockie at Cairns Lockie put out an interesting note the other day, and you have to agree with some of his comments.

For instance finance companies have become popular because other investments haven't delivered in recent years.

They offer guaranteed returns. If an investor deposits funds with a finance company for two years at 9.85%, that is the return they will receive.

He is quote critical of fund managers and their inability, or lack of desire, to offer some form of guaranteed return.

I do note that Money Managers' owned Orange Finance went some way down this track recently.

Lockie also raises the issue of "transparency of fees".

He argues that there are "absolutely no fees paid by those who invest in finance company debentures". Fund managers seem to have a plethora of fees that are often hard to rationalise.

One must remember though that finance companies aren't offering these investments out of the goodness of their hearts - as some advertising has shown some make fantastic profits.

Lockie also puts forward consistency of returns as a plus, saying "finance company returns have performed well, despite many changes in the economy."

The challenge though is how to pick the good from the bad. I have some thoughts on some of the research, or so-called research, out there, and will write on that soon.

Hopefully the piece we are putting together on fixed interest will also help you understand the sector.