Diversified Portfolios - InvestSMART Fixed Income - 30 September 2016
InvestSMART Fixed Income September Report
The InvestSMART Fixed Income Portfolio produced a return of -0.04% over the monthof September and 1.2% over the three months, which was ahead of the benchmarkover both periods. Australian 10-year bond yields started the quarter at 1.981% and hita low of 1.819% in early August when the RBA lowered cash rates to 1.50%, only tosubsequently rise to a peak of 2.128% in September then re-trace and finish thequarter close to where they started at 1.908%. Since inception (around 9 months) theportfolio has delivered investors an income of around 3.8% and a slight amount ofgrowth of around 0.3%.
Looking forward we believe that volatility in fixed income bond markets is likely andthat the yield to maturity of around than 2% is insufficient to compensate investors forthat risk. This also materially contributes to the risk of fall short of the medium termobjective of outperforming. With that in mind we have invested around half of theportfolio in cash and a managed fund that invests predominantly in floating ratecorporate bonds. This means that the portfolio will deviate from the statedbenchmark from one month to the next but over the next three years we expect itshould be less sensitive to interest rate changes.
Growth of $10,000
PERFORMANCE SUMMARY TO 30 SEPTEMBER 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 30 SEPTEMBER 2016||1 MONTH||3 MONTHS||6 MONTHS||SI* (P.A.)|
|InvestSMART Fixed Income Portfolio||-0.04%||1.20%||3.09%||4.10%|
|Bloomberg AusBond Composite 0 Yr Index||-0.22%||0.93%||3.82%||5.70%|
|Excess to Benchmark||0.18%||0.27%||-0.74%||-1.61%|
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