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Model Portfolio: 16 September 2013

Bond portfolio treads water for another month...

    

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.

Buy Date Issue Life (yrs) Nominal Purchase Price Value Accrued
24.3.11 Provident Financial 7.5% 2016 3 6,000 100 106.35 6,381 211
31.7.12 ICAP 5.5% July 2018 5 5,000 100 102.83 5,142 37
3.9.12 CLS HLDGS 5.5% BDS 2019 6 12,000 101 100.83 12,099 145
10.10.12 Workspace 6% Sept 2019 6 5,000 100 104.80 5,240 134
5.3.13 Paragon 6% 2020 6 10,000 100 102.25 10,225 23
16.5.12 Tesco Bank 5% 2020 7 5,000 100 104.85 5,243 82
20.9.12 ICG 6.25 Sept 2020 7 12,000 100 103.50 12,420 0
8.5.13 IPF 6.125 % 7 7,000 100 100.93 7,065 156
26.3.13 Unite Group 6.125%  7 10,000 104 103.75 10,375 166
13.10.11 National Grid PLC 1.25 2021 8 10,000 100 113.18 11,318 61
27.3.13 Provident Financial 6% 2021 8 5,000 100 103.83 5,191 143
31.1.10 Places for People 1% RPI 2022 9 6,000 100 109.85 6,591 9
8.3.11 Italy 6% 2028 15 5,000 100 98.79 4,939 38
8.3.12 Nationwide 6.875% U/D 5,000 88 101.00 5,050 66
16.5.13 Co-Op 13% Perp. U/D 5,000 90 57.00 2,850 0
20.07.13 Bruntwood Investments 6% 2020 7 10,000 100 102.75 10,275 93
            120,403 1,365

 

Category Sum Notes
Securities 120,403 Valuation of current holdings
Accrued 1,365 Interest accrual on above
Cash 32,860 Inc. interest & coupons received.
Total 154,628