The InvestSMART Fixed Income Portfolio produced a return of 0.8% which was better than the return available from cash deposits but behind the 1.3% return from the Australian composite bond index.
During the last year both cash and Australian Government Bonds have generated returns of around 2-4%. However, during that period bonds have been much more volatile, falling by more than 3% at one point last year.
Looking forward we believe that further volatility in fixed income bond markets is likely and that the yield to maturity of less than 2.5% is insufficient to compensate investors for that risk. This also materially contributes to the risk of fall short of the medium term objective of outperforming. With that in mind we have invested around half of the portfolio in cash and a managed fund that invests predominantly in floating rate corporate bonds. This means that the portfolio will deviate from the stated benchmark from one month to the next but over the next three years we expect it should achieve a higher return with less volatility.
Growth of $10,000
PERFORMANCE SUMMARY TO 31 MAY 2016
Source: Praemium, RBA.
Returns are before expenses and fees. Returns are shown as annualised if the period is over 1 year. * Since Inception (SI) date is 22 December 2015.
|PERFORMANCE TO 31 MAY 2016||1 MONTH||3 MONTHS||SI* (P.A.)|
|InvestSMART Fixed Income Portfolio||0.83%||1.45%||2.24%|
|Bloomberg AusBond Composite 0 Yr Index||1.26%||1.30%||3.35%|
|Excess to Benchmark||0.15%||0.15%||-1.11%|
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