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Model Portfolio: 1 August 2013

Model portfolio rises despite the Co-Op exposure…

    

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 participated in the ORB Bruntwood Investments 6% 2020  new issue which we covered in Bond of the Week and are seeing a small initial gains as the bond trades at 100.975.

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.

Buy Date Issue Life (yrs)  Nominal Purchase Price Price Value Value % change Accrued
24.3.11 Provident Financial 7.5% 2016 3 6,000 100 106.65 6399 2 152
31.7.12 ICAP 5.5% July 2018 5 5,000 100 105.45           5,273  2 1
3.9.12 CLS HLDGS 5.5% BDS 2019 6 12,000 101 102.6          12,312  3 59
10.10.12 Workspace 6% Sept 2019 6 5,000 100 105.305           5,265  2 94
5.3.13 Paragon 6% 2020 6 10,000 100 100.9          10,090  0 245
16.5.12 Tesco Bank 5% 2020 7 5,000 100 104.5           5,225  2 50
20.9.12 ICG 6.25 Sept 2020 7 12,000 100 102.225          12,267  1 277
8.5.13 IPF 6.125 % 7 7,000 100 99.7           6,979  0 100
26.3.13 Unite Group 6.125%  7 10,000 104 104.55          10,455  3 85
13.10.11 National Grid PLC 1.25 2021 8 10,000 100 114.15          11,415  5 43
27.3.13 Provident Financial 6% 2021 8 5,000 100 102.813           5,141  1 104
31.1.10 Places for People 1% RPI 2022 9 6,000 100 106.6           6,396  2 0
8.3.11 Italy 6% 2028 15 5,000 100 100.833           5,042  -2 298
8.3.12 Nationwide 6.875% U/D 5,000 88 96           4,800  -10 21
16.5.13 Co-Op 13% Perp. U/D 5,000 90 60           3,000  -45 0
20.07.13 Bruntwood Investments 6% 2020 7 10,000 100 100.95          10,095  1 15
            120153   1,547
Category Sum            Notes
Securities 120,153 Valuation of current holdings
Accrued 1,547 Interest accrual on above 
Cash 32,090 Inc. interest & coupons received. 
Total 153,790  
Richard Berry