The Market Matters Active Income Portfolio provides an active approach to income producing equities, ETFs and listed Income Securities – Click here to view
The Income Portfolio fell by -4.19% over the course of the week while cash sits at ~4%. Alumina (AWC) was the biggest drag on performance down by -11.48% while Insignia (IFL) was also weak, off by -9.75%. The positions that offered stability to the portfolio during a very volatile period were CBAPG which is the CBA hybrid, finishing +0.04% and the ANZPI, a similar but longer dated hybrid security from ANZ that added +0.13%. No fixed income position in the portfolio fell by more than 2% which shows why asset allocation becomes important in a decline for a portfolio designed for investors looking for sustainable income with significantly less volatility than the market.
Last week we flagged our intention for this portfolio of reducing equities and increasing fixed income exposure given our current positioning which sits at 28% in fixed interest (incl Hybrids), versus 68% in equities (& 4% cash). Given our expectations that 2022 will be a more challenging year for equities overall, we are looking to increase our weighting towards FI. In line with this view, we are also considering the ‘beta’ of this portfolio which is a measure of volatility versus the market.
This week, lets sharpen up the pencil and look at our likely intentions:
Sell: Insignia Financial Group (IFL) & National Storage REIT (NSR) into strength. At ~$2.60 we flagged NSR as expensive and a likely sale candidate. The share price has now fallen to $2.40 and while we have no intention of selling at that price, markets are volatile and we are flagging NSR as a sale back up around the $2.60 level.
We hold 9% of the portfolio in these two positions which we intend to re-allocate back into fixed income, most likely hybrids. We also flag the following positions as those that are at the higher end of the risk spectrum: Service Stream (SSM), Magellan (MFG)), Ive Group (IGL) & Alumina (AWC).
