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Model Portfolio: & July 2009
Model Portfolio : 7th July 2009
The last month or so has seen us take the model portfolio up to (almost) fully invested. Broadly speaking, this is a good idea - we donít get paid much interest on the money laying fallow in the brokerage account. Our fully invested stance will not last for long. We have £5,000 nominal of Experian bonds maturing later in the month so we should be shopping again some time before Cowes week. Perhaps a new issue might fit the bill? We will keep our eyes peeled for anything suitable.
Valuation-wise, there is little to report. We now have 15 positions, a good level of diversification. Corporates are firm-to-unchanged, but PIBS remain very wobbly. I would be tempted to top-up with some more holdings in this latter sector, given the double-digit yields now available (see the recent Bond of the Week for more details on PIBS and prefs). However, the portfolio already has a fair exposure to the sector, so I am not rushing into the trade.
Finally, we note that a few of our holdings are over-par. For the longer-dated bonds such as British Telecom, this is no problem - we will simply sit back and enjoy the high coupon. In the case of the shorter-dated Merrill Lynch (now Bank of America), there may be a case for taking a profit. It all depends on what price we can get in the market.