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Model Portfolio: 3 July 2008

Valuations lower across the board................

    

This month’s valuation sees the model portfolio down around 1.5% from June’s valuation. Not a great result, but an illustration of the comparatively defensive properties of the asset class (we note that the FTSE100 is down 9.4% over the same period).

We are now fully invested, but with the prospect of liquidity coming back into the portfolio over the next few months from both coupon payments and the redemption of the Vodafone July ’08 bond in seven days time. We will be taking a deep breath and using this money to buy more bonds, intending to pick up a few bargains in the current depressed environment. We suspect that this year will continue to be a difficult environment and that more fall-out will be seen, particularly for corporate issuers such as retailers, property companies etc . However, by Q4, we hope to emerge into a more stable market, having locked in some decent yields (high single figures, low double figures) in the process.

Updates to the model portfolio will be featured in our Bond of the Week.

Model Portfolio

Date of Purchase

Issue

Nominal

Purchase Price

Current Price

Value  

Accrued

16 Jan 2007

Vodafone 6.25% 10 July 2008

10,000

 100.42

100

 10,000

 621

30 Jan 2007

Kingfisher 5.625% 15 Dec 2014

10,000

  95.24

82

 8,200

 316

15 Feb 2007

Alliance & Leicester 4.25% December 2008

10,000

  97.46

98.65

 9,865

 221

7 Mar 2007

Segro 5.5% 20 June 2018

10,000

  97.35

82

 8,200

 27

28 Mar 2007

EIB 4.75% 06 June 2012

10,000

  96.82

96.32

 9,632

 41

18 April 2007

Merrill Lynch 5.125% 24 Sept 2010

10,000

  97.66

93.65

 9,365

 403

18 July 2007

Treasury (Gilt) 4.25% 7 March 2011

10,000

  95.20

97.85

 9,785

 137

19 Aug 2007

Portman (Nationwide) 6.25% PIBS

 5,000

  97.50

91

 4,550

 65
9th Jan 2008 Marks & Spencer 5.625% March 2014 10,000   95.82

 88.83

 8,883  163
10th April 2008 Bradford and Bingley 11.625 PIBS 10,000  112.00

111

 11,100  526
1st May 2008 Citigroup 5.125% Dec 2018 10,000  85.30

82.25

 8,225  292
Bond sub total              

 

Category Sum            Notes
Securities

97,805

Valuation of current holdings
Accrued

2,812

Interest accrual on above 
Cash

2,830

Including interest & coupons received. 
     
Total

£103,447

 

Mark Glowrey

Notes: Dealing costs are £15 per trade, and this is factored into the total valuation of the portfolio. There is no stamp duty payable on bonds, although this may be applied to preference shares and other classes of security. Valuations are based on bid-side levels.