Tuesday 31 October 2017 by Elizabeth Moran Trade opportunities

Thinking about investing in bonds? Have a look at our sample portfolios

Are you just starting out in fixed income or thinking about adding more bonds to your portfolio? These sample $1 million portfolios containing around 20 bonds each will help 

​Photo by Joe deSousa

Over the years we’ve presented a range of sample portfolios to give ideas to new and existing clients of the types of bonds available.

Two sample portfolios – one investment grade and the other high yield are now available on the FIIG website. The investment grade has a minimum rating of BBB- (or equivalent) whereas the high yield includes ratings below that. As a reminder, credit ratings can only be disclosed to wholesale investors.

The portfolios were developed by our Portfolio Strategy and Research teams to show example portfolios and the associated yields they offer. Portfolio Strategy has a current recommendation that investors allocate roughly equal percentages to the three different types of bonds – fixed, floating and inflation linked and both portfolios reflect that current view.

The portfolios show projected income for the first five years and a break down by sector.

Below is the investment grade portfolio which has a high allocation to senior secured bonds. The Portfolio Strategy team deliberately chose these bonds to help protect capital and income. Legally, if the company goes into a wind-up or liquidation, any funds available for debt and equity will be repaid to senior investors first.

The investment grade portfolio only contains Australian dollar denominated bonds and has a high allocation to bonds linked to infrastructure. Although we practise sector diversification, we are typically comfortable with larger allocations to this sector as it is usually stable and exhibits low volatility.  Sydney Airport is a common used security, as is Sungroup, which is the finance subsidiary of a Transurban led consortium managing a network of Queensland toll roads.

The high yield sample portfolio has an allocation to sub investment grade Australian companies like Axsesstoday and Lucas Total Contract Solutions as well as a holding in the US high yield market, including names like Hertz, Avon, Frontier and Newcastle Coal. Naturally, this portfolio also has core holdings in Australian investment grade names as well.

Sample Investment Grade portfolio – 4.53% per annum estimated return if held to maturity

Note: Prices accurate as at 3 October but subject to change

Investment Grade portfolio summary

To find the portfolios, simply go to Private Investors/ Getting started/ Sample portfolios. Or click on the links below to go direct:

  1. Investment gradeExternal link - opens in a new window
  2. High yieldExternal link - opens in a new window

Note: The portfolios are updated monthly.

There is a current shortage of corporate bonds. Not all bonds shown are readily available and you may need to be wait listed to purchase some bonds.

For more information, please call your local dealer or the Portfolio Strategy Team on 1800 01 01 81

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