Mechelany Advisors’ BOND Portfolio was implemented on April 6th, 2020 with an initial capital of EUR 3’000’000 and a 1 to 1 leverage with a EUR 3’000’000 short term loan paying 1 % interest.
The objective of the portfolio was to secure a EUR 400’000 annual income for the long term.
The COVID situation led the world Central Banks to buy bonds massively on their balance sheets driving yields to recod low levels.
As a result, the Portfolio yielded a +32.86 % net return over the past 7 months or a net appreciation of EUR 985’681.
Bonds are extremely expensive and we expect the current reflationary policies to drive inflation much higher in the next few quarters. In the US the Crossborder capital / Federal Reserve model points to a sharp back up in bond yields in the coming months.
This state of affairs has led us to reduce our exposure and take our capital gains much earlier than expected, raising almost 2.7 million EUR of cash that will be redeployed when the next credit crisis unfolds.
In the mean time, we will continue to reduce exposure and raise cash.
Today we sold our position in EVERGRANDE, China’s largest real estate developper that is facing a liquidity crunch.
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