InvestSMART Hybrid Portfolio Update
We are removing the ANZ Bank Capital Note III’s (ANZPF) from the portfolio as it is now screening as expensive and increasing our position in the CBA PERLS VII Capital Notes (CBAPD). We see CBAPD as relatively attractive given similar duration.
|
Security |
Last Price |
Payment Freq |
Franking |
First Call Date |
Yield to Call |
|
ANZPF |
$102.30 |
Semi-Annual |
100% |
23-Mar-23 |
5.79% |
|
CBAPD |
$97.80 |
Quarterly |
100% |
12-Dec-22 |
6.03% |
Figure 1: Key Metrics, ANZPF vs CBAPD
We had been holding National Australia Bank Income Securities (NABHA) at 7.00% with the assumption that there would be an on-market buyback in the near future. However, given recent lesser expectation of this occurring and a relatively low running yield of around 3.8%, we are choosing to de-weight the position.
We are reinvesting the proceeds from this into the National Australia Bank Capital Note (NABPC) as we feel it provides attractive short dated exposure. It is trading on a running yield of around 5.10% with a first call back date in March 2020.
|
Security |
New Weight |
Previous Weight |
|
ANZPF |
0.00% |
1.20% |
|
CBAPD |
8.50% |
6.90% |
|
NABHA |
5.00% |
7.00% |
|
NABPC |
8.50% |
6.30% |
Figure 2: Hybrid Income Model changes
You should see these changes reflected in your portfolio over the next few days.
If you want more information about our Hybrid Income Portfolio, click here.
Frequently Asked Questions about this Article…
The ANZ Bank Capital Note III (ANZPF) is being removed from the portfolio because it is now considered expensive. We are reallocating resources to more attractive options.
The CBA PERLS VII Capital Notes (CBAPD) are seen as attractive due to their relatively appealing yield of 6.03% and similar duration compared to other options.
The CBA PERLS VII Capital Notes (CBAPD) pay dividends on a quarterly basis, providing regular income to investors.
We are reducing our position in National Australia Bank Income Securities (NABHA) due to a lower running yield of around 3.8% and decreased expectations of an on-market buyback.
The National Australia Bank Capital Note (NABPC) is being added to the portfolio because it offers attractive short-dated exposure with a running yield of around 5.10%.
The expected yield to call for the ANZ Bank Capital Note III (ANZPF) is 5.79%, but it is considered expensive at its current price.
The first call date for the CBA PERLS VII Capital Notes (CBAPD) is December 12, 2022.
You should see these changes reflected in your portfolio over the next few days, as we adjust the weights of various securities to optimize returns.
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