Diversified Portfolios - InvestSMART Fixed Income - October 2016
InvestSMART Fixed Income Portfolio October Report
The InvestSMART Fixed Income Portfolio produced a return of -0.6% over the month of October and -0.2% over the three months, which was ahead of the benchmark over both periods. Australian 10-year bond yields spiked over the month, starting the month at 1.908% and finishing at 2.346%. This benefitted the portfolio given the lower duration of the portfolio versus the benchmark.
Looking forward we believe that volatility in fixed income bond markets is likely and that the yield to maturity of around than 2% 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 be less sensitive to interest rate changes.
Growth of $10,000
PERFORMANCE SUMMARY TO 31 OCTOBER 2016
Source: Praemium, RBA.
Returns are after fees and before expenses. Returns are shown as annualised if the period is over 1 year. * Since Inception (SI) date is 22 December 2015.
|PERFORMANCE TO 31 OCTOBER 2016||1 MONTH||3 MONTHS||6 MONTHS||SI* (P.A.)|
|InvestSMART Fixed Income Portfolio||-0.64%||-0.21%||1.77%||2.99%|
|Bloomberg AusBond Composite 0 Yr Index||-1.28%||-1.08%||2.23%||4.35%|
|Excess to Benchmark||0.64%||0.87%||-0.47%||-1.36%|
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