Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hello Jame sand the whole team, Thank you so much for all your information and the analysis behind your views. It is really helping to guide me as I plan to semi-retire in 3 years or so. I have 40% growth portfolio, 10% Int Equities and 30% Income and 20% cash. I don't really don't own any bonds. Do you think now may be a good time to purchase some for my income portfolio and if so which do you consider a good choice? Thank you so much, Bob
Hi Bob,
We cannot give Personal Advice at MM, which means we do not take into consideration any investors personal circumstances.
Generally speaking, the benefit of bonds is two fold, they allow an investor to lock in a current rate for the life of the bond, and if/when interest rates fall, the value of the bond will generally go up, whilst also paying a yield. We think interest rates will track lower over the coming years which will support the total return offered in bonds from now. The other aspect is around stability or returns, by combining bonds into a portfolio, consistency of returns generally improve.
We currently like bank bonds, bonds from investment grade industrial companies and even Government bonds, some of which do trade on the ASX. Our best point of reference is the MM Active Income Portfolio where we hold 11% in fixed rate bonds along with 25% in floating rate hybrids.
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