Wednesday 10 March 2021 by Jessica Rusit trading-strategy-2021-800 Trade opportunities

Executive Summary - Portfolio strategies for the year ahead

As markets adjust to the new norm of unconventional policy measures, we discuss trading implications and how best to position portfolios. The RBA is steadfast in maintaining its support for lower (and near zero) rates for an extended period of time until inflation is actually within the 2-3% target range.

Recent market movements have highlighted that not only can financial markets and central banks be at odds with each other, but investors seeking ongoing income from their fixed income portfolios shouldn’t be overly concerned about such movements.

Longer dated fixed rate bonds have sold off with the rise in long end yields, but with the short end anchored by the RBA the steepness of the curve may offer opportunities in longer dated credit exposures. We look at the AT&T 2028 performance as an example.

We further discuss methods of increasing yield such as moving down the capital structure and capturing the complexity premium in securitised products such as RMBS in this article.

Read the full article here.