Interest Income Portfolio - Portfolio Adjustment
- {{x.value}}
{{ twilioFailed ? 'SMS Code Failed to Send…' : 'Enter verification code' }}
{{ completedStep1 ? 'Start your free 15 day trial now' : content.trialHeading.replace('{0}', user.FirstName) }}
{{ content.upgradeHeading.replace('{0}', user.FirstName) }}
The email address you entered is registered with InvestSMART
Please login to continue
We have sent you an email with the details of your registration.
Looks you are already a member. Please enter your password to proceed
{{ upgradeCTAText }}
Updating information
Please wait ...
Your membership to InvestSMART Group recently failed to renew.
Please make sure your payment details are up to date to continue your membership.
Having trouble renewing?
Please contact Member Services on support@investsmart.com.au or 1300 880 160
You've recently updated your payment details.
It may take a few minutes to update your subscription details, during this time you will not be able to view locked content.
If you are still having trouble viewing content after 10 minutes, try logging out of your account and logging back in.
Still having trouble viewing content?
Please contact Member Services on support@investsmart.com.au or 1300 880 160
Please click on the ACTIVATE button to activate your Intelligent Investor 15-day free trial
Please click on the ACTIVATE button to finalise your membership
Unsuccessful registration
Registration for this event is available only to Eureka Report members. View our membership page for more information.
Registration for this event is available only to Intelligent Investor members. View our membership page for more information.
- You are already registered for this event.
- This event is already full.
- Please select a quantity for at least one ticket.
- {{ i }}
Forgotten password
Please enter your email address below to request a new password
- Verify your email address by clicking on the link we sent to {{user.Email}}
- You now have free access, we look forward to helping you on your financial journey.
The objective of the InvestSMART Interest Income Portfolio is to provide returns in line with the Bloomberg AusBond Composite 0 Yr Total Return Index. The portfolio is suitable to investors with a more conservative risk appetite, or for use in forming the defensive portion of a diversified portfolio.
ETFs allow investors to construct diversified portfolios at a lower cost, and as the Australian ETF market continues to develop the number of options available to investors to tailor their portfolios to meet their objectives continues to grow.
As a category, Fixed Income focused ETFs have grown strongly with FUM increasing close to 50% and the number of products on market going from 17 to 25 in the 12 months to December 2017. As a result, the opportunity for us to adjust our portfolio to better achieve returns in line with our objectives while also reducing costs has improved.
Changes
Removal of BetaShares High Interest Cash ETF (ASX: AAA). The yield on AAA has gradually declined since the establishment of the Interest Income portfolio now sitting at around 2%. As such, we will reinvest this cash allocation into higher yielding fixed interest securities.
Removal of the Macquarie Income Opportunities Fund (MAQ0277AU). Where appropriate, we continually aim to reduce costs within our portfolios. During 2017, two floating rate funds were listed, FLOT which we currently hold and BetaShares Australian Bank Senior Floating Rate Bond ETF (ASX: QPON). Removing MAQ0277AU and reinvesting across these two securities for our floating rate exposure will see the weighted average indirect cost ratio (ICR) of the portfolio reduced to 22bp.
Replacement of iShares Core Composite Bond ETF (ASX: IAF) with three separate ETFs. IAF is comprised of Treasuries, Government Bonds & Corporate Bonds. By selling IAF and reinvesting the proceeds across three separate ETFs, we are able to maintain our fixed interest exposure while also improving the level of control we have over our weighting to each sector. The three new ETFs are:
- Vanguard Australian Corporate Fixed Interest ETF (ASX: VACF)
- iShares Treasury ETF (ASX: IGB)
- Vanguard Australian Government Bond ETF (ASX: VGB)
Outcomes
Overall, the key benefits that arise from these changes include:
- Reduction in ICR
- Greater alignment to our benchmark
- Improved credit profile
- Greater control over individual sector allocations
Call 1300 880 160
Start a chat
Schedule a call
