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Model Portfolio: 8 December 2011
Model Portfolio : 8 December 2011
We are slightly late with our monthly valuation for November, but the results can be seen in the table below. The first thing to note is that there is little change in the bottom line from last month. However, there is some movement within the portfolio. Income continues to flow in, both from coupons received and from the accrued interest ticking upwards on the valuations. But, on the capital value front, activity is much more two-way. Here we see some fairly large moves (by bond standards), notably in the financial area with issues from Goldman and RBS trading in the eighties. This illustrates the point that a structured portfolio is less volatile than the average of its components.
Out position in Enterprise Inns is worrysome. The price of these bonds continues to head south, indicating that market confidence is lacking. Interestingly, the share price of this company has shown some technical improvement over the last few days, suggesting that there is some divergence of opinion. We are happy to hold.
In the high-quality end of the corporate bond market, things are rather better. Here the bonds tend to track the upwards trend of gilts, a good example being the double-A rated Places for People.
Finally, we have £12,000 of cash. £6,000 of this is earmarked to buy the new Intermediate Capital Group 7% 2018 bond, out this month. The other £6,000 will no doubt find a home in the new year.