In late 2015 FIIG addressed a significant gap in the market for investors unsatisfied with historically low interest rates who were holding overweight cash positons by combining their successful DirectBond Service with professional investment management by a dedicated IMA Portfolio Management Team. The service, which embraces the increasing momentum toward Corporate Bonds is known as MIPS (Managed Income Portfolio Service), prior to its launch advisers could not obtain direct or highly diverse exposure to the Australian high-yield Corporate Bond on their client’s behalf without significant capital.
Over the course of the last year investors have been responsive to the launch, MIPS currently has $150M under management with its flagship program, Income Plus returning 5.19% for the 12m to 31 January 2017 (net of fees). The MIPS Core Income program, which holds a minimum of 85% Investment Grade, returned 3.1 % over the same period (net of fees). These programs have ranked very highly within their peer group over their first full year.
Benefits & Programs
Critical to the success of MIPS is its ability to offer unprecedented directly owned portfolio diversity by enabling exposure to individual bonds for as low as $10k, investors can now benefit from exposure to a portfolio of 25 Corporate Bonds for a $250K investment, previously institutional parcels had a prohibitive entry threshold of $500K. This diversity, coupled with direct ownership of Corporate Bonds, provides highly desirable benefits for investors including predictable income, investment control, portfolio stability and exposure reporting and valuation. For the first time Advisers can now connect their clients to high yield, rated and unrated exposure where the client retains the maturity date protection and coupon generation offered to them as the legal owner combined with professional management from a highly experienced team of fixed income specialists.
MIPS offers four Investment Programs – Conservative Income, Core Income, Income Plus and Inflation-Linked tailored to different risk appetites and investment goals. Advisers can select a single program or invest across a number of programs in line with their client insights. Over time they can make adjustments should the client requirements change, or as they move beyond accumulation into wealth preservation phase. Clients with over $5M are eligible for a customised service.
MIPS for Advisers
For time-poor Advisers, expert fixed income management has been a significant advantage given how time consuming tasks like monitoring markets, credit research, bond selection and transacting can burden an adviser. Aside from these the considerable operational efficiencies of outsourcing the management of the investment their client retains all the benefits of direct ownership of the underlying bond. In addition MIPS offers the benefit of institutional pricing with a flat management fee. Further, the adviser enjoys investment transparency with compatible datafeeds providing internal reporting of each individual bond holding via a 24/7 reporting portal.
MIPS provides an alternative for advisers seeking to invest clients who are overweight in cash but wish to retain confidence with predictable income to support their client’s all-important lifestyle.
You can learn more about FIIG’s Corporate Bond offering by contacting FIIG Adviser Services on 1800 01 01 81