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.
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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: 6.10%+ PA^
Running Yield: 6.49%+ PA^
Sectors:
- 51.40% Financials
- 21.28% Industrials
- 10.51% Energy
- 16.81% Real Estate
| Issuer | Nominal Value | Yield | Type | Maturity | Credit Rating |
|---|---|---|---|---|---|
| Liberty Funding Pty Ltd | 100000 | 9.28 | Residential Mortgage Backed Security | 10-12-2053 | Ba2* |
| HSBC Holdings PLC | 50000 | 5.88 | Variable Coupon Bond | 21-03-2029 | BBB |
| Lloyds Banking Group PLC | 50000 | 5.97 | Variable Coupon Bond | 31-08-2028 | BBB- |
| Pacific National Finance Pty Ltd | 60000 | 6.50 | Fixed Rate Bond | 08-09-2031 | BBB- |
| Liberty Financial Pty Ltd | 50000 | 7.08 | Floating Rate Note | 16-03-2028 | BBB- |
| Lendlease Finance Ltd | 50000 | 6.67 | Fixed Rate Bond | 31-03-2031 | Baa3* |
| Ampol Ltd | 50000 | 5.90 | Floating Rate Note | 19-03-2027 | Baa3* |
| JEM NSW Schools II Pty Ltd | 50000 | 6.13 | Indexed Annuity Bond | 28-11-2035 | A1* |
| Sydney Airport Finance | 34000 | 5.72 | Capital Indexed Bond | 20-11-2030 | BBB+ |
| Genworth Financial Mortgage Insurance Pty Ltd | 50000 | 7.22 | Floating Rate Note | 03-07-2025 | BBB+ |
Source: FIIG Securities
* Where S&P ratings not available, Moody’s ratings displayed.
^ Prices/yields accurate as at 22 March 2024 but subject to change
Portfolio 2: Inflation Portfolio
Yield to Worst: 5.93%+ PA^
Running Yield: 7.08%+ PA^
Sectors:
- 50.33% Financials
- 12.53% Industrials
- 10.28% Energy
- 16.72% Real Estate
- 10.15% Utilities
| Issuer | Nominal Value | Yield | Type | Maturity | Credit Rating |
|---|---|---|---|---|---|
| Liberty Funding Pty Ltd | 100000 | 9.28 | Residential Mortgage Backed Security | 10-12-2053 | Ba2* |
| Lloyds Banking Group PLC | 50000 | 5.97 | Variable Coupon Bond | 31-08-2028 | BBB- |
| RWH Finance Pty Ltd | 60000 | 5.97 | Indexed Annuity Bond | 30-06-2033 | A2* |
| Liberty Financial Pty Ltd | 50000 | 7.08 | Floating Rate Note | 16-03-2028 | BBB- |
| Resolution Life Australasia Limited | 50000 | 6.12 | Floating Rate Note | 09-12-2025 | Baa2* |
| Ausnet Services Holdings Pty Ltd | 50000 | 6.39 | Floating Rate Note | 06-10-2025 | BBB- |
| Ampol Ltd | 50000 | 5.90 | Floating Rate Note | 19-03-2027 | Baa3* |
| JEM NSW Schools II Pty Ltd | 50000 | 6.13 | Indexed Annuity Bond | 28-11-2035 | A1* |
| Sydney Airport Finance | 40000 | 5.72 | Capital Indexed Bond | 20-11-2030 | BBB+ |
| Genworth Financial Mortgage Insurance | 50000 | 7.22 | Floating Rate Note | 03-07-2025 | BBB+ |
Source: FIIG Securities
* Where S&P ratings not available, Moody’s ratings displayed.
^ Prices/yields accurate as at 22 March 2024 but subject to change
Portfolio 3: Recession Portfolio
Yield to Worst: 5.19%+ PA^
Running Yield: 5.32%+ PA^
Sectors:
- 60.95% Financials
- 20.84% Industrials
- 10.21% Energy
- 8.00% Real Estate
| Issuer | Nominal Value | Yield | Type | Maturity | Credit Rating |
|---|---|---|---|---|---|
| Westpac Banking Corporation | 50000 | 5.99 | Variable Coupon Bond | 15-11-2033 | BBB+ |
| BPCE SA | 50000 | 6.48 | Variable Coupon Bond | 24-10-2033 | BBB+ |
| Lloyds Banking Group PLC | 50000 | 5.97 | Variable Coupon Bond | 31-08-2031 | BBB- |
| Australian Government | 60000 | 4.41 | Fixed Rate Bond | 21-03-2047 | Aaa* |
| Queensland Treasury Corporation | 40000 | 4.45 | Fixed Rate Bond | 14-03-2033 | AA+ |
| Australian Government | 50000 | 3.64 | Fixed Rate Bond | 21-04-2029 | Aaa* |
| Pacific National Finance Pty Ltd | 50000 | 6.50 | Fixed Rate Bond | 08-09-2031 | BBB- |
| Ampol Ltd | 50000 | 5.90 | Floating Rate Note | 28-11-2035 | Baa3* |
| JEM NSW Schools II Pty Ltd | 50000 | 6.13 | Indexed Annuity Bond | 28-11-2035 | A1* |
| Sydney Airport Finance | 40000 | 5.72 | Capital Indexed Bond | 20-11-2030 | BBB+ |
Source: FIIG Securities
* Where S&P ratings not available, Moody’s ratings displayed.
^ Prices/yields accurate as at 22 March 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
| Issuer | Market Value | Yield | Maturity/Call Date | Credit Rating |
|---|---|---|---|---|
| Qantas Airways | 50000 | 5.58 | 12/10/2026 | BBB |
| Pacific National Finance | 50000 | 5.65 | 19/05/2025 | BBB- |
| Volkswagen Fin Services | 50000 | 4.92 | 14/04/2025 | A3 |
| Woolworths Group | 50000 | 4.47 | 20/05/2025 | BBB |
| Hyundai Capital Services | 50000 | 5.37 | 21/03/2025 | BBB+ |
| Aurizon Network | 50000 | 4.75 | 21/06/2024 | BBB+ |
| Australia Pacific Airport | 50000 | 4.75 | 11/11/2025 | BBB+ |
| Stockland Trust | 50000 | 4.38 | 22/03/2024 | A- |
| Australian Rail Track | 50000 | 4.25 | 11/12/2024 | AA1 |
| Toyota Finance Australia | 50000 | 3.50 | 21/03/2025 | A+ |
* 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
| Company | Description | Min. Investment | Min. Bond Parcel | ||
|---|---|---|---|---|---|
 | Australian Bond Exchange | The 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 | $10,000 | https://www.bondexchange.com.au/invest-in-bonds-directly/ |
 | Income Asset Management | Income 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 | $50,000 | https://incomeam.com/ |
 | Curve Securities | Curve Securities are term deposit and fixed interest specialists. We have been creating opportunities that elevate our clients’ performance through innovation in fixed income solutions since 2009. Our portfolio of services includes term deposits, fixed interest securities, investment management, the Curve Portfolio Manager (a way to manage and report on your investments) and Yieldhub (an online platform displaying interest rates from over 80 banks). | Access available through an adviser | Access available through an adviser | https://curvesecurities.com.au/ |
 | FIIG Securities | We provide private investors, intermediaries and corporate market clients access to high quality fixed income investments and flexible AU$ bond financing. | $50,000 | $10,000 | https://www.fiig.com.au/ |
 | Fixed Income Solutions | At 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 | $50,000 | https://www.fixedincomesolutions.com/ |
 | Laminar | Laminar 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/A | N/A | https://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.
