Do you want more income? If your answer is yes, we have excellent news for you! Durig’s FX2 Portfolio has a lifetime track record of historical outperformance of its peer benchmarks while generating extremely high levels of fully customizable income options, something that no mutual fund can offer, all within your own separately managed account.
- Year-to-Date (YTD) Return of 10.98%
- Trailing 3 Year Return of 9.84%
- Trailing 5 Year Return of 6.78%
- Annualized Return Since Inception (Lifetime Return) of 8.46%
Durig’s Fixed Income 2 (FX2) Portfolio still leads its peers in fixed income in performance over time, with its annualized lifetime return of 8.46% exceeding the closest benchmark by over 3%. FX2 also outperformed its peers in trailing 5 year and trailing 3 year return periods by nearly 3% and 4.5%, respectively.
We believe this is due to the very short average maturities in the portfolio (less than 4 years), which help to reduce the impact of a changing interest rate environment, as well as the portfolio’s negative beta of -0.78 when benchmarked to its peer in fixed income, and a low beta of 0.40 when compared to the market as a whole. These metrics tell us that the FX2 Portfolio has a negative correlation to bond markets and a very weak correlation to the overall market.
Declining Interest Rates
The trend of lowering interest rates seems to be continuing with the 30 Year US Treasury now yielding less than 2% (historical chart below).
This begs the question; why would investors look 30 years ahead for a return of less than 2% ? This rate would hardly even begin to keep up with the current rate of inflation which is about 1.8%, and would expose investors to significant inflation risk which is the declining purchasing power of an investment over time due to inflation, as well as substantial Interest rate risk, which is the likelihood of decreased investment value due to abrupt shifts in interest rates.
Because of the length of time US Treasuries and other longer-termed debt instruments are typically held for, they are more susceptible to interest rate risk than shorter-termed fixed income investments, such as those contained in Durig’s FX2 Portfolio.
In comparison, Durig’s Fixed Income 2 (FX2) High Yield Managed Income Portfolio has an average maturity of less than 4 years and an average current yield of over 8%. This equates to more portfolio income in a shorter period of time, with maturing bond principal reinvested in new issues so that the portfolio is positioned to continue to generate high levels of income and attractive returns.
The other side of FX2’s total return comes from the principal amount invested in the bonds themselves, which are often priced at a discount so it is important to also consider principal risk (where the principal amount of an investment can fluctuate due to market forces). Even if bond principal fluctuates, as long as the bond is still paying coupon interest, it is still positively accruing interest income on a daily basis.
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Durig’s Fixed Income 2 (FX2) Portfolio has continued to outperform its peers in fixed income over time, and looks to be positioned to continue this trend. With US Treasury Notes now offering investors less and less yield, many investors are seeking an alternative source of fixed income returns that do not require a waiting period of 30 years.
For investors who want more fixed income investments for their ability to generate income and their attractive yields, the Fixed Income 2 (FX2) Managed Income Portfolio may be an excellent solution. The portfolio’s short average maturities aid in reducing the impact of interest rate changes and non-correlated assets help to mitigate much of the market volatility present today with regular interest payments helping to increase current income and boost total return. Additionally, separately managed accounts enable us to custom tailor the account to meet your income needs.
TD Ameritrade Advisors
Our highly successful FX2 Portfolios are also available to Registered Investment Advisors that at TD Ameritrade Institutional via separately managed accounts. Please ask us how this may work for you.
Durig Capital has several high yield portfolios available, click below to learn more.
Disclaimer: Please note that all yield and price indications are shown from the time of our research. Our reports are never an offer to buy or sell any security. We are not a broker/dealer, and reports are intended for distribution to our clients. The high yield strategies presented in this review by Durig Capital may not be suitable for all investors. This is not investment advice from Durig Capital, nor a specific recommendation to buy or sell securities. If you have any questions or concerns about its suitability for your personal investment, you should seek specific investment advice from a registered professional before making an investment decision.