Fixed income portfolio tailored to meet a business owner’s needs
01
Client wants a safe pool of funds to generate cashflow
Client A wanted to set aside a safe pool of funds to generate enough cashflows to meet his mortgage payments and his family’s expenditures, such that his family’s lifestyle can be maintained even if the business expansion did not go as expected.
02
Fixed Deposits give too low returns
He was thinking of putting this pool of cash in fixed deposits. However, he had some hesitation as this would require a large amount of cash to be trapped in relatively low-yielding FDs.
03
Increasing interest rates meant more cash out
Moreover, in Q4’18 mortgage rates were increasing and he found it difficult to estimate an adequate budget.
Customised low volatility portfolio
Focused on high quality bonds.
Average return of 7% provided material upside to FD rate of ~1% p.a.
Generating regular quarterly cashflow
Worked closely with client to estimate quarterly cashflow needs and advised on suitable investment quantum
Actual quantum lesser than initially expected, leaving more free cash for business expansion
Protection against rising mortgage or interest rates
Portfolio included interest rate swaps which fixed mortgage rates for the next 5 years, providing Client A with peace of mind regardless of the interest rate environment.
Client’s portfolio was able to provide regular cash flow to pay mortgages which are now fixed.