'Institutions' is a word that is used so freely that many people don't even realise they don't know its true meaning.  This article is the second in a series on understanding the true meaning of words and expressions used in finance.  The first in the series (on the correct meaning of 'hair cut') is here.

This article compares the hybrid notes issued by Australian banks to the 'catastrophe' bonds issued by insurance firms.  The similarities and differences bring out key ideas about the type of risk that hybrid notes contain, and therefore which investors they best suit.

Stock market investors have to decide whether they will be ‘active’ or ‘passive’ investors. The fundamental ideas that frame this choice are poorly understood, even by many investment professionals.  So, when I heard (on 16 January) of the passing of the great Jack Bogle – the foremost exponent of passive stock market investing, and the founder of Vanguard – I thought I would write this article on the fundamentals of the active v passive question in his honour. It is the first in a series on active vs passive management issues that I have planned.