A warning for yield investors

The time for easy gains in the bond market appears to have passed.

Readers will know that I am both ecstatic and surprised by the return of the income portfolio in financial year 2012/13. My targeted return from the portfolio is 8% per annum and so the return over 2012/13 of 27.3% is very satisfying. However, the portfolio did benefit from a sustained rally in yield securities in general and the portfolio correctly identified a few securities (particularly bank shares) which did much better than the broader yield market.    

In reviewing the rally in yield securities it is important for readers to understand the influences that caused this performance.

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