Selecting XTBs based on Yield vs Maturity

Longer-dated XTBs generally having higher yields, but also having higher interest rate risk (for fixed-rate XTBs).  So, how do you select a portfolio that maximises yield and minimises interest rate risk?

You can’t have the absolute best of both worlds simultaneously, but it is possible to generate a portfolio with the maximum yield you can get for the minimum term to maturity.  A Yield vs Maturity pay-off.

The quick way to do this is look at the out-performance of each XTB’s yield over the cash rate which can be done with a simple formula:

XTB YTM – Current RBA Cash Rate (1.75%)
                 Term to Maturity

Select XTBs by Yield vs Maturity

YTMF02 Bank of Queensland 07 NOV 2016 FLOATING BBSW + 1.15% 2.221%
YTMCWN Crown 18 JUL 2017 FIXED 5.75% 2.462%
YTMAZJ Aurizon 28 OCT 2020 FIXED 5.75% 3.856%
YTMMG1 Mirvac 18 DEC 2017 FIXED 5.50% 2.634%
YTMLLC Lend Lease 13 NOV 2018 FIXED 5.50% 2.8937%
YTMDOW Downer 29 NOV 2018 FIXED 5.75% 3.374%
YTMIPL Incitec Pivot 25 FEB 2019 FIXED 5.75% 3.170%
YTMAWC Alumina 19 NOV 2019 FIXED 5.50% 4.881%
* Data as at 06 JUL 2016

Then you can rank the results of that calculation as shown in the table below.

This gives you a very different portfolio with an average yield of 3.19%*

The average life is shorter as the XTBs with maximum yields for minimal term, come to the fore.

Other filters to narrow your selection

There are a number of other filters you can use to narrow your selection. Some of these include:

Contact Us

Got a question? Call us now

1800 995 993

Available XTBs

Check out the range of fixed and floating XTBs available on ASX

View Now

High Yield Model Portfolio

Find out more about this model portfolio of XTBs

View Details

Maturity Ladder Model Portfolio

Find out more about this model portfolio of XTBs

View Details

Top stories

Shielding retirement savings: The time

Read Article

Top 10 economic indicators on

Read Article

Price and yield – an

Read Article

XTBs defy the gravitational pull

Read Article