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Model Portfolio: 15 December 2010
Model Portfolio : 15 December 2010
The last valuation of 2010 has a slightly downbeat note. Gilts, and indeed other benchmark government bonds, have been selling off; this has impacted the prices of the corporate and bank bonds that we hold.
Generally, corporate spreads have been fairly resilient, but bank bonds less so. We have been buying into the sell-off of the last month or so, topping up our holding in the Goldman 5.5% 2021 subordinated bond and the super-long Lloyds 6.5% 2040 bond. I remain convinced by the value offered by the latter, although at the time of writing the price is still falling and the yield is over 7%. Sadly, the bond is still not available for Crest (CDI) delivery.
I am now somewhat overweight the financials and will look back to trim the Lloyds 5.375 2015 or the RBS "RB53" into a rally.
New additions include the Ecclesiastical 8.625% pref, and this security has jumped to a premium over the subscription price. Our other prefs, CoCo’s etc looked rather grim last months, but appear to have recovered somewhat - suggesting that these instruments are an equity-correlated asset class (for the moment!).
All in all, the December valuation bring us to a figure of £117,405, down a little from last month’s bottom line, and a fair bit off the Autumn peaks. We run the portfolio on a total return basis and in January this year it stood at £108,440. We’re up 7.6% on the (slightly truncated) year - not a stellar performance, but not too bad either.
Looking forward, the last couple of months has also seen us tuck away a couple of attractive and high yielding positions, so roll on 2011 and all it may bring.