Bond Portfolio Examples

Most high performing investment portfolios include some allocation towards government and corporate bonds. Just like equities, investors can choose from a variety of different bond investments, each with their own level of risk and return (yield). Fixed Income News Australia has teamed up with FIIG Securities to create three sample portfolios to demonstrate the different type of investments available and the yields.

Quick Links

The Yield to Maturity of a portfolio is the expected return if you hold all the bonds until the maturity date and the Running Yield represents represents the return of the portfolio if you hold it for a year (calculated by dividing the coupon or distribution by the market price).

READ MORE: BOND TERMS EXPLAINED

Most bonds are traded through the over-the-counter market (OTC), that means you need to find a broker to transact on your behalf and to discover last known traded prices. It is a negotiated market where traders talk to each other and broker trades.

In Australia, the minimum OTC bond parcel size is $500,000, but some brokers will trade in smaller parcels to appeal to personal investors. Parcels begin at $10,000 per bond and there is also often a minimum investment amount. In most cases investors need to qualify as ‘wholesale investors’ to transact in this market.

Portfolio 1: Balanced Portfolio

Yield to Worst: –%+ PA^
Running Yield: –%+ PA^

Sectors:

  • 51.40% Financials
  • 21.28% Industrials
  • 10.51% Energy
  • 16.81% Real Estate

IssuerNominal ValueYieldTypeMaturityCredit Rating
Ampol Ltd 500005.17 Floating Rate Note 19-03-2027Baa3*
Genworth Financial Mortgage Insurance Pty Ltd500005.43 Floating Rate Note03-07-2025BBB+
HSBC Holdings PLC500005.40 Variable Coupon Bond 21-03-2029BBB
JEM NSW Schools II Pty Ltd500005.98 Indexed Annuity Bond28-11-2035A1*
Lendlease Finance Ltd 500006.01 Fixed Rate Bond 31-03-2031Baa3*
Liberty Funding Pty Ltd1000007.95 Residential Mortgage Backed Security10-12-2053Ba2*
Liberty Financial Pty Ltd 500006.31 Floating Rate Note 08-03-2029BBB-
Lloyds Banking Group PLC500005.36Variable Coupon Bond31-08-2028BBB-
Pacific National Finance Pty Ltd 600005.92 Fixed Rate Bond 08-09-2031BBB-
Sydney Airport Finance 340005.68 Capital Indexed Bond 20-11-2030BBB+

Source: FIIG Securities

* Where S&P ratings not available, Moody’s ratings displayed.

^ Prices/yields accurate as at 18 June 2024 but subject to change

Portfolio 2: Inflation Portfolio

Yield to Worst: –%+ PA^
Running Yield: –%+ PA^

Sectors:

  • 50.33% Financials
  • 12.53% Industrials
  • 10.28% Energy
  • 16.72% Real Estate
  • 10.15% Utilities

IssuerNominal ValueYieldTypeMaturityCredit Rating
Ampol Ltd 500005.24 Floating Rate Note 19-03-2027Baa3*
Ausnet Services Holdings Pty Ltd 500005.22 Floating Rate Note 06-10-2025BBB-
Genworth Financial Mortgage Insurance 500005.47 Floating Rate Note 03-07-2025BBB+
JEM NSW Schools II Pty Ltd 500005.98 Indexed Annuity Bond 28-11-2035A1*
Liberty Funding Pty Ltd1000008.00 Residential Mortgage Backed Security10-12-2053Ba2*
Liberty Financial Pty Ltd 500006.37 Floating Rate Note 08-03-2029BBB-
Lloyds Banking Group PLC500005.36 Variable Coupon Bond31-08-2028BBB-
Resolution Life Australasia Limited 500005.16 Floating Rate Note 09-12-2025Baa2*
RWH Finance Pty Ltd 600005.72 Indexed Annuity Bond 30-06-2033A2*
Sydney Airport Finance 400005.68 Capital Indexed Bond 20-11-2030BBB+

Source: FIIG Securities

* Where S&P ratings not available, Moody’s ratings displayed.

^ Prices/yields accurate as at 18 June 2024 but subject to change

Portfolio 3: Recession Portfolio

Yield to Worst: –%+ PA^
Running Yield: –%+ PA^

Sectors:

  • 60.95% Financials
  • 20.84% Industrials
  • 10.21% Energy
  • 8.00% Real Estate

IssuerNominal ValueYieldTypeMaturityCredit Rating
Australian Government600004.32Fixed Rate Bond21-03-2047Aaa*
Australian Government 500003.37 Fixed Rate Bond 21-04-2029Aaa*
Ampol Ltd500005.17 Floating Rate Note 28-11-2035Baa3*
BPCE SA500006.02 Variable Coupon Bond 24-10-2033BBB+
JEM NSW Schools II Pty Ltd 500005.98 Indexed Annuity Bond 28-11-2035A1*
Lloyds Banking Group PLC500005.36 Variable Coupon Bond 31-08-2031BBB-
Pacific National Finance Pty Ltd 500005.92 Fixed Rate Bond 08-09-2031BBB-
Queensland Treasury Corporation 400004.42 Fixed Rate Bond 14-03-2033AA+
Sydney Airport Finance 400005.68 Capital Indexed Bond 20-11-2030BBB+
Westpac Banking Corporation500005.63Variable Coupon Bond15-11-2033BBB+

Source: FIIG Securities

* Where S&P ratings not available, Moody’s ratings displayed.

^ Prices/yields accurate as at 18 June 2024 but subject to change

Portfolio 2: Short Duration Investment Grade Bonds

Yield to Maturity: 5%+ PA^

This model portfolio has 10 securities with equal weightings of 10%, yielding 5% pa^. The portfolio is built with short duration Investment Grade bonds and is for investors looking for predictable income during periods of interest rate hikes.

Sectors:

  • 40% Consumer, Cyclical
  • 40% Industrial
  • 10% Consumer, Non-Cyclical
  • 10% Financial
IssuerMarket ValueYieldMaturity/Call DateCredit Rating
Qantas Airways500005.5812/10/2026BBB
Pacific National Finance500005.6519/05/2025BBB-
Volkswagen Fin Services500004.9214/04/2025A3
Woolworths Group500004.4720/05/2025BBB
Hyundai Capital Services500005.3721/03/2025BBB+
Aurizon Network500004.7521/06/2024BBB+
Australia Pacific Airport500004.7511/11/2025BBB+
Stockland Trust500004.3822/03/2024A-
Australian Rail Track500004.2511/12/2024AA1
Toyota Finance Australia500003.5021/03/2025A+

* Rating to worst applies the lower of S&P and Moody’s ratings, respectively

^ Prices/yields as at 20 June 2022

Bond brokers that deal in smaller sized OTC bond parcels

CompanyDescriptionMin. InvestmentMin. Bond Parcel
abxlogoAustralian Bond ExchangeThe Australian Bond Exchange (ABE) is Australia’s pre-eminent marketplace for investing in fixed income securities. We offer better income, with less fees using the reliable and stable returns of corporate bonds for retiring and retired clients dissatisfied with risky or low returning investments.No Minimum$10,000https://www.bondexchange.com.au/invest-in-bonds-directly/
IAM LogoIncome Asset ManagementIncome Asset Management Group delivers a diverse solution for fixed income investors across Treasury Management, Cash, Bonds, Debt Capital Markets and Asset Management. We provide investors and portfolio managers with the most trustworthy and capable access to research, execute and manage their income investments.$50,000$50,000https://incomeam.com/
curvelogoCurve SecuritiesCurve Securities are term deposit and fixed interest specialists. We have been creating opportunities that elevate our clients’ performance through innovation in fixed income solutions since 2009. Our portfolio of services includes term deposits, fixed interest securities, investment management, the Curve Portfolio Manager (a way to manage and report on your investments) and Yieldhub (an online platform displaying interest rates from over 80 banks).Access available through an adviserAccess available through an adviserhttps://curvesecurities.com.au/
fiiglogoFIIG SecuritiesWe provide private investors, intermediaries and corporate market clients access to high quality fixed income investments and flexible AU$ bond financing.$50,000$10,000https://www.fiig.com.au/
fixedincomesollogoFixed Income SolutionsAt Fixed Income Solutions, we aim to provide the best expertise, pricing, liquidity and execution in the fixed income sector. Quality and efficiency lie at the heart of all we do. With our broad market coverage and global reach, we explore every opportunity to generate outstanding returns for our clients.$50,000$50,000https://www.fixedincomesolutions.com/
laminarlogoLaminarLaminar Capital is a client focused fixed income specialist providing capital markets, investment management and advisory services to institutional, middle market and high net worth clients.N/AN/Ahttps://laminarcapital.com.au/

ASX listed bonds

A range of approximately 30 Australian Commonwealth Government Bonds (ACGBs) can be traded via the ASX.

There is also a handful of corporate bonds available and a range of hybrids.

XTBs

The XTB company aim to make the benefits of ‘high quality’ corporate bonds accessible to everyone on the ASX. They identify high quality senior corporate bonds in the wholesale market and provide investors with exposure to them through individual XTBs trading on ASX.

Recent Articles

Most Popular