I had the privilege of speaking at SGX last month, where i shared that I am expecting $48,000 passive income from one of my bond portfolio in 2018.
Here is my bond portfolio.
- OUE 4.25% 2019 (2 lots)
- Olam 5.8% 2019
- Fragrance 4.75% 2021
- LippoMalls 6.6% perp call 2022
- QBE Insurance 5.25% USD perp call 2025
And here is the proof that I am holding these bonds:
I am quite proud of this portfolio as I designed it myself. I try to
- have a mix of straight bonds and perpetual bonds
- have predominantly SGD and some USD (5x SGD bonds vs 1x USD bond) to have as little currency risk as possible, and yet to have some exposure to USD.
- have the maturity staggered from 2019 to 2025. The 3 lots in 2019 will enable me to buy more bonds at higher coupons if interest rate goes up. Anyway, as long as I hold till maturity, interest rates going up or down does not bother me at all.
- own bonds that are backed by strong entities such as Temasek or billionaires, or/and with tangible assets such as properties with little leverage. The most important factor in buying bonds is credit risk! Not interest rates.
In this past couple of weeks, while most stocks and reits fell at least 6%, my portfolio also fell….by 0.38%! Which is really insignificant.
Remember that most analysts say to avoid bonds in 2018 because bond yield are expected to rise, and bond price should drop. Well, look who is laughing now. The fear of interest rates rising has whacked the stock market, but my bond portfolio has proven to be resilient.
If you’ll like to construct a resilient bonds portfolio like I have, please contact me.
- I'm a remisier with Maybank Kim Eng, and as a bonds and REITs investor myself, I guide my clients to build resilient bonds and REITs portfolios. If you like to be guided, please contact me regarding how to become my client; It's free!
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