Short and Medium Duration Instruments Continue to ‘Rule the Roost’

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While the rocky, volatile markets continue each day (or almost each day) we have been able to count on the stability of shorter duration instruments to bring reasonably good gains to our portfolios.  This is best borne out in our 2014/2015 Short/Medium Duration Income Portfolio.

We have now ‘booked’ the balance of the September interest and dividend payments to the portfolio (a few day early–just so we don’t forget) and we couldn’t be more pleased with the results. We explain the logic behind this portfolio on the portfolio page and like all portfolios even though they are constructed with the best of intentions the results are not always what one would hope for at years end (in fact they almost never perform as intended).

This small portfolio started with an annual yield of 6.7%, but currently is at just 5.93% as a few issues have been called, a few new issues bought, but having a cash level of almost $10,000. We are now waiting for the new Newtek Business Services Notes to begin trading–the 7.5% coupon on these medium duration notes will help our current portfolio yield.


Started in mid-October 2014, this portfolio has garnered a gain of 6.32% to date. With a couple dividends and interest payments yet before October 15th we hope the porfolio ends the year with a gain of around 6.4%

Notice that we did remove 1 issue last month from this portfolio, because we sensed a higher than normal risk in this issue (MVC Capital Senior Notes).  While we never intend to ‘trade’ our portfolios we will not sit idly by with a known high risk situation in our models.

With what is being proven (so far) to be a solid method to invest conservative income investors should consider a similar allocation in their portfolios.

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