Investing

XTB Maturity Ladder Model Portfolio

XTB Maturity Ladder Model PortfolioMaturity Ladder Portfolio

Investment objective

Within the investable universe of XTBs to construct a fixed income model portfolio that aims to provide:

  • A regular and predictable income stream
  • Return of capital from maturing XTBs on an annual basis
  • A capital preservation focus and low levels of price volatility
  • An absolute return that is above returns on term deposits
  • Liquidity, to ensure investment flexibility

Model portfolio manager

Australian Corporate Bond Company Limited (ACBC)

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Investment strategy and approach

To ensure the best opportunity to meet the model portfolio’s objectives, ACBC selects a portfolio of XTBs using a 2-stage quantitative process, with a qualitative overlay.

Quantitative process

Stage 1: Selection

Define the investment universe of:

  • Rank by increasing maturity date
  • Rank by highest yield to maturity
  • Investment grade credit only¹
  • Weighting parameters (issuer, security, sector²)
  • Available liquidity

¹ At time of establishment
² As defined by GICS Sub Industry

Stage 2: Application

Apply a set of rules to select an optimal XTB maturity ladder model portfolio.

Qualitative overlay

Adjustments may be made to the portfolio. These adjustments may be made to reflect market conditions, despite the rules being satisfied.

The general approach is to hold securities to maturity and have a security mature on a yearly basis.  However, model portfolio changes may be made in response to:

  • An increase in the yield to maturity, by adding securities
  • An increase in the universe of available securities
  • Improvement to the portfolio, by switching securities

Designed for investors who…

  • Seek a transparent and capital-stable fixed income model portfolio that offers a regular and predictable income stream
  • Seek a return of capital on a yearly basis to manage their cash flow requirements
  • Are looking for lower risk than equities & hybrids and higher returns than ‘cash-like’ investments

Portfolio parameters

Parameters
Inception date 14 July 2016
Investment universe Available XTBs, fixed or floating
Minimum number of securities 5
Minimum credit rating Individual bonds must be investment grade at the time of inclusion within the model portfolio
Maximum individual issuer exposure 30%
Maximum individual security weighting 20%
Maximum individual sector² weighting 30%
Capital structure parameters
  • 100% exposure to senior corporate bonds
  • 0% exposure to hybrids
Benchmark RBA cash rate
Maximum maturity Maximum maturity of 8 years per security
Liquidity All XTBs must have sufficient observable liquidity

View portfolio rules and maintenance

View Model Portfolio Performance Reports

Request this portfolio

To request more information about this portfolio, and receive details of the XTBs included within the portfolio please contact us, or complete the form on the link below:

Tel: 1800 995 993
Email: advisers@xtbs.com.au

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XTB Financial Services Guide

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