FIIG announces two enhancements to the Managed Income Portfolio Service providing investors with a new investment grade option and announcing a reduction in fees
FIIG is pleased to announce the launch of a fourth MIPS investment option – the Conservative Income Investment Program, which invests in investment grade securities only. This program was developed in response to investor demand for a conservative option with the comfort that all bonds have been reviewed by an external ratings agency and classified as investment grade.
FIIG also announces a reduction in the transaction fees, for both new and existing clients, to $20 per transaction.
The Conservative Income program has broad based appeal across private clients, advisers and the not for profit/community sector for the following reasons:
- Provides direct access to regular income
- Diversity of holdings
- Higher portfolio liquidity
The portfolio aims to return over 4.58%p.a.* (before fees).
By investing via MIPS, clients outsource the management of their fixed income portfolio to FIIG’s in house Portfolio Management Team (PMT) with the following key benefits:
- Investors retain direct ownership of their bonds
- Fees are transparent; there are no brokerage fees and investors receive institutional market price access
- Ability to monitor portfolio with daily valuations online
- Comprehensive monthly reporting
- Assurance is provided by three levels of governance and oversight
There are four MIPS programs to choose from: Conservative Income, Core Income, Income Plus and Inflation Linked. The chart and table below depicts the net and gross yields for each program and the current allocations to different types of bonds, categorised as rated, unrated, senior or subordinated.
MIPS programs – gross yields (before fees) and allocations to bond types
MIPS Programs – example portfolio yields and exposure details
| Investment program | Gross yield to maturity | Net yield to maturity | Gross yield in excess of cash (1.75%) | Unique bonds in portfolio | Allocation to investment grade senior | Allocation to investment grade subordinated | Allocation to investment grade & unrated |
| 6 month TD major bank | 2.55% | 2.50% | 0.80% | 1 | 100% | 0% | 0% |
| Conservative income | 4.58% | 3.73% | 2.83% | 18 | 80% | 20% | 0% |
| Core income | 5.06% | 4.21% | 3.31% | 15 | 90% | 0% | 10% |
| Inflation linked | 4.84% | 3.99% | 3.09% | 12 | 80% | 20% | 0% |
| Income plus | 5.94% | 5.09% | 4.19% | 25 | 30% | 30% | 40% |
All example portfolios as at 16 May 2016 and provide indicative returns and the current bond allocations. The Net Yield to Maturity is net of Management Fees and Custody Fees assuming a portfolio value of $500,000 (note assumes zero Transaction Fees).
The MIPS’ PMT select bonds for each program in line with the investment objectives and the limits set out in the Information Memorandum. The universe of bonds is common to all programs, for example, the Conservative Income program invests in investment grade bonds that may also be held by the Core Income, Inflation Linked or Income Plus programs. The credit rating constraint on the Conservative Income Program is that all bonds must be investment grade and there is a cap on subordinated bonds of 20%.
MIPS is available to wholesale investors with a minimum investment of $250,000. There is also the option to create a customised program for investors with $5m or more. Investors who currently hold a bond portfolio have the freedom to transfer their bonds across into a MIPS program, rather than selling them all down.
Please click here
to see the updated Information Memorandum.
If you would like to discuss MIPS investments please don’t hesitate to contact one of our experts on 1800 01 01 81.
*Fees of 0.85% apply for investments from $250,000 with fees on larger investment sizes negotiable. Refer to the Information Memorandum for full detail on fees.