Retail investors urge caution in debt product investment

New Zealanders have up to $25 billion in fixed-income investments - spread between finance companies ($12 billion to $14 billion), mortgage funds ($4 billion), hybrid debt investments offered mainly by brokers ($500 million), and corporate bonds ($6.5 billion).

The top of the interest rate cycle and an expected deterioration in business conditions have prompted researcher FundSource to speak out.

"We would like to express concern and urge extreme caution," said FundSource business manager Tim Anderson.

"We're carefully monitoring the situation and our concern is heightening.

"Money continues to flow into these debt investments and we feel there is a lack of understanding of the investments and the risks involved."

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