Futuro Forum | Bowral 2012 Realm Investment – Fixed Interest

Realm Investment House

Fixed interest – The good, the bad and the ugly. An investment approach

What is Fixed Income

What are you missing out on?

It is complex

Very important part of your Asset Allocation

What about everything else

Government Debt State

Infrastructure Debt

UnsecuredSecured (RMBS)

UnsecuredAsset Back (Secured)

Secured (Covered)

International Debt

Mezzanine Hybrid

Deposits ADI Deposits Commercial Paper ABCP Paper

Commonwealth Local

Bank Debt

Corporate

Secured

Government Corporate ABS

Fixed Coupon Floating Coupon Indexed Coupon

Managing Risks

Yield

8%Term Risk

RelativitiesSolvency & Liquidity

It is Complex! – Term Risk

• Fixed Income is about managing cash flows and future Income

• Capital preservation with a focus on regular income

• The best thing for a fixed income investor is you get your money back

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Relativities

What's Happening

Relativities

Managing Liquidity & Solvency

What's Happening

What’s in the Market

What are we doing about it?

Investment Committee Framework

Asset SelectionPortfolio Construction

Solvency Screening – the Six C’s

Character

Capacity Capital

Collateral

Conditions Capital Structure

1 2 3 4 5 6 7 8 9 10 110

50100150200250300350400450500550600

Asset TypeTrue

Rel

ative

Spr

ead

1 2 3 4 5 6 7 8 9 10 110

100

200

300

400

500

600

Asset Type

Spre

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Liquidity Analysis

Everything above the line is relatively cheap

Asset types available from a single Issuer ranked by credit Solvency Risk

< ------- Less Risk More Risk ------- >

Portfolio Optimisation

Citi Group Economic Surprise index

3 Year Bond vs 10 year Bond Curve

Bank Asset vs Local GDP

What's Happening

What’s in the Market

European Debt

What's Happening

What’s in the Market

Australian 3Year Government Bond

US Bond Curves

Realm Investment House

www.realminvestments.com.au

Andrew Papageorgiou - Investment ManagerPh: +613 9008 7292 Mob: +61 428 137 366 andrew.p@realminvestments.com.au

Robert Camilleri - Investment ManagerPh: +613 9008 7291 Mob: +61 413 096 374 rob.c@realminvestments.com.au

Richard Kerr - Investment ManagerPh: +612 8014 4234 Mob: +61 414 557 673 richard.k@realminvestments.com.au

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