Although returns will fluctuate like almost any asset class, Value Investment Partner’s allocation to fixed interest is towards active fixed interest managers in a variety of domestic and global debt markets with a range of security types, endeavouring to outperform passive vehicles such as term deposits. 

Being an active manager at times when volatility is high and it is required to protect investor capital the frequency of trading can become very high potentially a couple times a week, but in normal market environments trading on a portfolio wide level occurs quarterly. Albeit in mind that throughout each quarter positions can be introduced, eliminated, increased, or reduced as the investment committee decides.

When investing in Value Investment Partners, investors are able to see their direct investments at any time through our portal. If these investments include managed funds, the holdings within these managed funds will usually be able to be provided at request, although this is at the discretion of the underlying fund manager.

This portfolio does not receive dividends from companies but receives its income from things called coupon payments attached to the bond or relevant debt instrument. These are a fixed payment made periodically each year throughout the life span of the security. Because it is not a share dividend it does not include any franking credits as this income is yet to be taxed until you receive it.

There are three main components of the costs associated with an investment such as this. 

The first being your management fee which is 0.55% (including GST) per annum calculated daily on the portfolio value. That is the simplest cost unchanged throughout the year and applied the same on every dollar of your portfolio.

The second is your administration fee and this is a tiered cost depending on the total value of the portfolio/s you have with VIP but is capped at $2,100 per annum. Details on the different fee categories for administration can be found in the Investment Option Document and/or Members Guide.

The third major cost component is brokerage and this is a moderately variable part of your total annual cost. In market environments that are highly volatile and require more frequent portfolio changes to protect capital, brokerage costs may be higher. In normal market environments portfolio turnover is constantly considered by the portfolio manager to optimise the trade off between high frequency of trading eroding outperformance and maximising client returns. Although there is a moderate variability in the brokerage costs it is a small part of the three major components of the total annual cost of the investment.

Volatility is managed constantly within the portfolio. This is achieved firstly by diversifying the holdings effectively in order to minimise company-specific risk. Diversification also extends to asset classes, where a combination of growth and defensive assets make up the portfolio to ensure clients always have exposure to a performing asset class in any market condition.

Value Investment Partners is not a hedge fund and does not take hedging positions with derivative contracts. Derivatives are financial instruments that derive their value is based on an underlying security, such as a stock. This portfolio does not directly use derivatives. 

When markets suffer declining price Value Investment Partners has successfully demonstrated our ability to reduce losses by investing in traditionally defensive assets that perform well relative to others in negative market environments. These assets include but are not limited to; cash, bonds, US dollars, gold, and consumer staples companies.