The new Managed Income Portfolio Service offers four options: Core Income, Income Plus, Inflation-Linked and a Customised approach for investors with over $5 million to invest. Last week we introduced the Core Income option. This week, we profile the Income Plus option
The Income Plus Investment Program
This program seeks to increase the investment return through a larger allocation to high yield securities while still retaining the benefits of a fixed income portfolio.
Compared to the Core Income Investment program this option allows the Portfolio Management team to invest, with more flexibility along the capital structure and credit ratings spectrum. This additional scope allows the team to identify strong risk-returning investments. This is achieved through extensive credit analysis on both the issuer/guarantor(s) of the bond as well as the security itself.
The table below shows more specific details of the portfolio including:
- minimum number of bonds,
- maximum modified duration,
- approved currencies
Income Plus Investment Program parameters
Source: FIIG Securities
Using the above parameters, we will look to identify a portfolio through a mix of investment grade, sub-investment grade and unrated bonds. As well as looking to identify investment opportunities in both the senior and subordinated debt universe.
The investment due diligence process for sub investment grade and unrated debt securities is extensive, given the Australian high yield bond market is still developing.
We will seek to perform a detailed analysis on an issuer’s financial statements as well as direct guarantors and material related parties including:
- Profit and loss
- Balance sheet and cash flow statements
- And both audited and management accounts
From this analysis, we will establish a view on the current credit metrics of the issuer (and other relevant parties) as well as forming a forward looking view. Our analysis will also seek to include company operation reviews and meetings with the company’s senior management if deemed necessary.
Through this process, the we will identify a portfolio of high yield fixed income investments that the team believe have strong credit metrics and robust deal structures, to compliment the selection of investment grade bonds.
If you have any queries please contact your FIIG Representative or call our offices. Please also note that the Managed Income Portfolio Service is available to wholesale investors only with a minimum investment of $250,000.