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Model Portfolio: 1 August 2013
Model Portfolio : 1 August 2013
The model portfolio sees a small rise since the as the market recovers from the recent correction. Net asset value rises to £153,790 following 5% and 3% rises from National Grid and Unite Group Bonds. The majority of bonds are seeing 1-3% rises since the last write up, with a small dip from the Italy 6%, but rather larger drops from Nationwide (10%) and Co-Op 13% (down 45%).
We still retain around 20% cash (£32k) after taking profits as the market peaked at the beginning of the year and in and early March . We are waiting for some further consolidation in bond prices before dipping our toes back in the water (see ORB index below)…
We added a small amount of the Co-Op 13% following our Bond of the Week, which is a good demonstration of how risky the bond market can be. A stark reminder that as well as generating fixed income through coupons, there is a real risk of capital depreciation. The bond is currently trading around 57, which we revisit in this week’s BoW . There is also an active discussion on the Fixed Income Investor Forum, that highlights some interesting issues…
Note: The portfolio is operated with real money initial deposit of £100,000 and traded through our live bond account. This is to accurately reflect the performance and holds a mixture of credits and bond types, from the AA-rated Places for People bond, down to more speculative holdings such as the BB- rated Enterprise Inns bond. The Portfolio also has a small proportion of its holdings in fixed income preference shares and “bond-like” instruments. Fixed Income ETFs may be added from time to time.