Mechelany Advisors' BOND PORTFOLIO Mechelany Advisors’ BOND PORTFOLIO was structured in 2020 for clients wanting to benefit from a EURO-based high yielding portfolio using a leverage of one to one and generating 14 % income per annum.
Our timing in implementing this bond portfolio could not be better as we took advantage of the March 2020 market meltdown to accumulate cheap corporate bonds offering tremendous value.
As the FED and other Central Banks opened the monetary spigots and started buying bonds, our portfolio rose significantly and is now up + 32.47 % since inception 5 months ago.
The two charts below show the exceptional nature of the current environment and explain our spectacular performance.
However, at current levels and with a probable temporary return of inflation, the drop in bond yields and the tightening pf risk spreads is no longer justifiable even if Central banks are here to keep-on buying bonds.
However, at one stage, credit risk worries will come back to the surface and we prefer to reduce our exposure and lock-in some profits.
We have taken some profits on a number of our bonds that had delivered between 25 and 30 % capital gains and raised our cash levels from almost 0 in April to EUR 2.4 Million, reducing our exposure by 40 % and increasing our cash levels to 60 % after the latest transactions done today.
Have cashed-in close to EUR 500’000 of capital gains and the portfolio is still delivering an annual income of EUR 300’000 at this stage.
We have also taken advantage of the rise in the EUR to de-hedge our currency risk and are now net long US dollars.
Portfolio Details ( before today’s transactions )
New Asset Allocation
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