Nicholas Grove: I'm Nick Grove with the Morningstar Individual Investor Conference in 2017, and I'm joined by Morningstar's John Likos.

John, where do you see the hybrids market heading as we close out the year and heading into the next few years?

John Likos: Yes. Sure. Look, the hybrid market has been very resilient in recent years. We've seen some particularly strong performance since around the middle of last year, which is probably no coincidence given that in the backdrop we've got our banks improving their capital position. So, look, we've got a strong banking system, still one of the strongest in the world. That supports the hybrid product, which remains a very, very important funding instrument for the banks.

So, we're pretty comfortable with where they are. They are probably maybe on average fair value, slightly overvalued on kind of the edge. However, we do expect some new issuance in the next couple of years. So, we think some of that supply side tailwind, which has supported it in the last 12-18 months, might actually work the other way and give investors the opportunity to actually access it maybe at better prices than what we are seeing today.

Grove: And John, where do you think is the best place for Australian investors to get fixed income exposure at present?

Likos: My preference for fixed income exposure has kind of always been the funds management, the fund options. And obviously, for us we prefer our clients and investors to utilise the funds that we cover. We undertake significant due diligence on a range of fixed income fund managers and it gives me comfort that these teams can actually manage the exposures on different levels. They can manage them by geography, by credit rating and by duration, whether they want to go long-term maturities or short-term maturities. So, that remains my preference.