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Ask Your Advisor: Should I take profit on long-dated government securities?
There is a right time to take profit and reinvest your funds depending on your goals and situation.
By Earl Andrew A. Aguirre
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Over the last two years, we recommended that peso government securities (GS) investors buy 5- to 20-year bonds paying coupons of at least 5% per annum (p.a.) net in order to position for lower interest rates.
Now that both the US Federal Reserve (Fed) and Bangko Sentral ng Pilipinas (BSP) have started cutting rates, investors who followed our advice should already start to see significant unrealized gains on their long-dated GS.
Lauren (not her real name), a 75-year-old client living off her pension and investments, is one of them. And she has a question: Should I start taking profit by selling these bonds? And where should I reinvest the proceeds?
Over the years, she has amassed a portfolio of over PHP 100 million in peso government and corporate bonds. Among these are PHP 30 million in 7