We have rebalanced our fixed income growth portfolios based on our outlook on fixed income markets in the coming years. We are highly positive on credit spreads and our portfolios are reflecting our view. Fixed Income Growth Portfolio (FIGP)
We have constructed two FIGP portfolios, one with fixed income securities and one with mutual fund fixed income schemes.
Since inception on 29th November 2013, the fixed income securities portfolio has generated absolute 44.78% returns or 14.03% CAGR. On rebalancing the portfolio on 5th January 2017, the portfolio has given 10.05% annualized return.
In January 2017, FIGP was rebalanced based on our Fixed Income Investment Strategy Report for 2017. We sold all the securities, which were 3 corporate bonds and one government security and added 3 lower rated corporate bonds and LIC HF AAA corporate bond, each having 25% weight in the portfolio. Table 1 gives the FIGP with fixed income securities. The FIGP portfolio has 8.95% Repco HF 2019, 7.81% LICHF 2021, 9.55% Hindalco 2022 and 13.8% Equitas 2022 with weights of 25% each. Currently the portfolio has a weighted average yield of 8.51% and an average maturity of approximately 4.6 years.
Table 2 gives the rebalanced FIGP with mutual fund schemes. We have included credit opportunities fund with 75% weight and short term income fund scheme with 25% weight in the portfolio. The weighted average yield of the portfolio post expenses is 7.6% while the average maturity of the portfolio is 2.87 years. The mutual fund portfolio carries interest rate and credit spread risk.
Since 29th November 2013 the portfolio has generated absolute 42.98% returns, annualized to 13.47%. On rebalancing the portfolio on 5th January 2017 last year, the portfolio has given 9.49% annualized return.
We are constantly monitoring the portfolios and will put out changes if any depending on changes in market conditions.Read our analysis on End of Low Interest Rates Globally to Determine Fixed Income Investment Strategy 2017