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Model Portfolio: 16 September 2013
Model Portfolio : 16 September 2013
Another slow month in the bond markets with our portfolio only showing modest gains. As before we are keeping some £32k in reserve to take up new issues. That is of course if they ever emerge!
We have seen a few institutional sized issues hit the market with good take up and right at the lower end of the scale smaller start up companies are turning to the bond market to raise funds. But both of these out of our target zone. The ORB market continues to grow and whispers are suggesting that the LSE may be increasing the constituents shortly, which is good news for bond investors. As more bonds on ORB mean more liquidity and better liquidity should lead to growth in new issues and potentially capital appreciation to compliment generous interest coupons. However, in-terms of capital appreciation the FTSE 100 index has performed better since the summer correction. It remains to be seen if bond prices will catch up or stagnate for another few months before investor interest returns.
The portfolio rises in value to £154,628 from £153,790. Only a few moves of note this month. Co-Op continues to hurt, down a further 5%. This has been covered in the bond of the week here and here as the coupon remains suspended. Another faller in the usually well performing financial sector is ICAP, which has dropped from 105 to 102.83. As with most other prices it loosely tracks the FTSE ORB index, but we’re still showing a profit from our issues par price, the 5.5% coupon remains attractive too. The share price remains firm though, with the Investors Intelligence P&F signals still showing bull trend momentum.
Good performers over the last month have been Nationwide, trading back above par at 101 after the recent sell off and our Places for People is up around 3% from last time at 109.85.
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.