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Model Portfolio: 8 December 2011

Model Portfolio valution steady, but individual bond prices show movement......

    

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.


Date of Purchase

Issue

Life (yrs) 

Nominal

Purchase Price

Current Price

Value  

Accrued

16 Aug 2009 RBS "Royal Bond 5.3% 2015 4 100  100  95.85*  9,585  /
24 March 2011 Provident Financial 7.5% 2016 5 6,000  100.15  105  6,300  90
21 June 2011 Places For People 5% 2016  5 10,000  100  105.25  10,525  230

7 Mar 2007

Segro 5.5% 20 June 2018

7

5,000

  97.35

105.8

 5,290

 132

16 Aug 2010 Enterprise Inns 6.5% Dec 2018 7 6,000

  83.5

 67  4,020

 7

04 Feb 2010 GKN 6.75% 2019 8 10,000  97.56  106.6  10,660  84
28 July 2010 RBS Royal Bond  5.1% 2020 9 5,000  96.03  87  4,350  220

13 Oct 2011

National Grid PLC 1.25 2021 10 10,000  100  101.30  10,130  23
06 May/19 Nov 2010 Goldman Sachs 5.5% Oct 2021 10 10,000  87.9   81  8,100  93
04 Nov 2010 RBS Inflation-Linked (3.9% min) 2022  11 5,000 100  82*  4,100  /
20 Sept 2010 Yorkshire Building Society 13.5% 2025 CoCo 14 5,000  116  112              5,600  134
08 Mar 2011 Italy 6% 2028 17 5,000  100.44  89  4,450  107
27 Sept 2011 British Telecom 5.75% July 2028 17 10,000 103.5  103.5  10,350  9
16 Sept/01 Dec 2010 Lloyds 6.5% Sept 2040 29 10,000  96.35  91  9,100  154
08 March Nationwide 6.875% U/D 5,000    88  83  4,150  145
12 Dec 2010 Ecclesiastical 8.625% prefs U/D 5,000   1.02  104*  5,200   /

 

Category Sum            Notes
Securities

111,910

Valuation of current holdings
Accrued

1,428

Interest accrual on above 
Cash

12,082

Including interest & coupons received. 
     
Total

125,420

 

 

Mark Glowrey