The median FIIG client received a 9.08%* rate of return net of fees, proving it’s been a good year for bond investors. With FY25 now behind us, we look at the returns FIIG clients received from their bond portfolios and the ways in which better returns were generated in this article.
Direct Bond ownership accessed through the OTC market offers higher returns from a risk-reward perspective, better diversification, the ability to tailor a fixed income portfolio to meet investors needs, and many more benefits.
Education (basics)
IABs offer protection against inflationary pressures, making them a crucial allocation during times of high inflation, but also offering many other benefits too. Here we discuss how they work and why they’re considered a core portfolio holding.
Education (advanced)
Despite the current rise in mortgage arrears resulting from the adjustment to higher interest rates and inflation as monetary policy normalizes, we maintain confidence in the RMBS sector. These instruments usually offer more favorable returns and a consistent income stream compared to standard corporate bonds. Our preference is generally for the safer investment-grade tranches in RMBS transactions, offering lower risk than sub-investment grade options.
Trade opportunities
The current portfolio yields an indicative 6.68%* to the assumed maturity dates and is an approximate $210k spend.
In this article, we discuss the FY23 reporting season and provides an overview of sectors covered by FIIG's Research team, including Insurance, Airline, and Real Estate. We highlight the challenges and trends in each sector, such as the solid performance in Insurance, mixed outlook for Airlines, and challenges in the Real Estate sector and emphasize the importance of diversifying portfolios across sectors for better returns and reviews the overall economic trend.
Knowledge Series
In this article FIIG's research team discusses the analysis of the FY23 reporting season, where insights into credit portfolio positions and future expectations are provided. In the analysis, over 30 credits were covered, including Australian REITs, focusing on aspects such as devaluations, interest rates, and market perceptions. Despite potential risks, there is confidence in the stability of these REITs, mainly due to their investment-grade ratings, manageable gearing, and covenant compliance.
Trade opportunities
The current portfolio yields an indicative 6.33%* to the assumed maturity dates and is an approximate $203k spend.
Opinion
Investors can benefit from participating in primary markets, where new bonds are introduced before secondary market trading. This participation often offers a premium, better pricing, and enhanced access, resulting in more attractive entry points for investors. Market conditions, demand, and issue size influence the size of the premium, and this premium can provide opportunities for investors to lock in higher returns, either through continued holding or selling for capital gains. New Issues also offer better accessibility compared to some scarce bonds in the secondary market.
Education (basics)
Diversifying fixed income portfolios across different categories such as companies, industries, and countries helps reduce specific risks. Diversification not only lowers risk, but also enhances long-term portfolio performance, drawing on the theory introduced by Nobel laureate Harry Markowitz. A well-diversified bond portfolio can lead to smoother volatility, improved returns, and reduced risk in uncertain economic and market conditions.