Medium Duration Income Portfolio

Portfolio Started 2/8/2018

NOTE–on 7/2/2019 we changed our “rules” for this model to allow for up to 25% of holdings to be longer dated maturities since the number of available securities with maturities that are on or before 2029 is very limited.

NOTE–the under performance of this model shows what happens when you hold just a singular issue which has issues–in this case Atlas Financial 6.625% baby bonds which fell from around $25 to around $10.  This was sold for a 55% loss.

Below is a portfolio that will represent a conservative (in terms of time to maturity etc–not in terms of pure quality) portfolio which in fact will be very close to the way we personally invest at this time (2/2018).  We have started these portfolios with beginning balances of $100,000.

We will hold only term preferreds and baby bonds with short or medium term maturities (and a term trust). This should keep volatility to a minimum because typically issues close to maturity will move up and down less as they tend to revert to $25 anticipating redemption or maturity. The further in time from the redemption of maturity date the more likely the share price will move up and down.

The portfolio will not be “traded”. As interest rates move higher the share price of these issues will likely move slightly lower, which may well present opportunities for the investor to lock in higher current yields to hold to maturity.

NOTE–most prices are near real time but a few baby bonds shown in the portfolio are only updated in price daily/weekly.

NOTE–this is not a recommendation to buy any security.  We use the portfolio primarily for educational purposes.