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Hybarger & Associates

Serving Small to Mid-Size Community Banks for over Thirty Years

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    Banking Insights

    Portfolio ~ Yields vs Valuations

    8/12/2019

     
    Which is most important?
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    For those who are not directly involved in managing a portfolio of bonds, there are many perplexing issues related to understanding the dynamics of a Fixed Income Portfolio compared to other investment vehicles. Perhaps the most vexing are the issues related to Valuation. With other types of investments, Valuation is the key to performance. However, this is not true in terms of the performance of a Fixed Income Portfolio. Yield is the key performance measure of a Bond Portfolio, with Valuation taking a very secondary position, which really represents a measure of opportunity cost. 

    ​In this report, we will attempt to separate performance, as measured by Yield, and Valuation, which is very real but truly represents a perspective on the Portfolio rather than a performance measure. Those who are unable to distinguish this difference are often doomed to poor performance, as the simple fact is that Valuations always improve as Rates fall and deteriorate as Rates rise, but neither has a direct impact upon Yield or performance...

    Click Here to continue reading.
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    • Who We Are
      • Firm's Founder and History
      • Officers
    • Who We Serve
      • Who Are Our Clients
    • What We Do
      • Asset / Liability Management >
        • Budgeting
        • Performance Analysis
        • Forecasting
        • Quality Control
        • ALM Board Reporting >
          • The Directors' Financial Digest
          • The Executive Management Series
          • The Account Level Forecasting Series
        • Alternative Planning Scenarios
      • Interest Rate Risk >
        • Reporting for Interest Rate Risk
        • Assumptions & Back-Testing
      • Portfolio Management & Accounting >
        • The InvestWise Reporting Series >
          • Portfolio Management Series
          • Financial Management Series
          • Econometric Series
        • "Total Return" Investment Strategy
      • Liquidity Risk Management
      • Capital Adequacy & Analysis
      • Dynamic Strategic Planning
      • Comprehensive Funds Management Policy
      • CECL Overview >
        • Historical Analysis
        • "Currently" Identifiable Risks
        • "Specific" Potential Risks
        • Potential "Future" Risks
        • Traditional Reserves vs CECL
      • General Consultation >
        • Holding Company Systems
        • Balance Sheet Pricing Strategies
        • Regulatory Reporting
    • What Our Clients Say
    • How We Interface
      • What happens when we become a Client?
      • How are Fees Determined?