The Medium Duration Income Portfolio is now performing exactly as expected.
This portfolio was formed in February, 2018 and thus is in the 4th month of existence.
At this moment the portfolio is up 1.58% and should approach 2% by the end of the month. Since the portfolio wasn’t fully invested (considered to be fully invested at 90% or so) for over a month a little income was lost the 1st month or two, but now the portfolio is hitting its stride.
Recall this portfolio is similar to our own personal holdings–term preferreds and baby bonds maturing in the next number of years, although there are two baby bond with a 2027 maturity.
Note that 1 baby bond was called (Arbor Realty) in April and was replaced shortly thereafter with Sutherland Asset Management 6.50% baby bonds (NASDAQ:SLDD) which has performed admirably.
This portfolio is set up as a learning tool. When we originally set up model portfolios many years ago they were for our personal learnings–now they are more for “newbies” to income investing–those that want a reasonable return without turning to common stocks, but want more than CD’s. The intention is that the various issues are not “traded”–simply held.
A reasonable goal for this portfolio is a return of 6% to 7% in a rising rate environment (although whether we are in a rising or falling environment remains to be seen).