There are two tranches for the bond:
1. LP bond 50k
Starting capital: 50k
Invested capital (inclusive of comms): $49,773.02
Cash accumulated from payout of holdings: $2,144
Paper gain (loss) from drop in market price of holdings: ($748.02)
Total portfolio gain (loss): $1,395.98
Total portfolio % changes: 2.79%
Going forward, since it's a capital guaranteed bond (by me, of course), I need to retain a certain amount of cash in case my parents need to liquidate it. I'll pay 70% of the net portfolio gain or 2% of 50k (which is $1000), whichever is higher. That should be the policy going forward.
70% of $1,395.98 is $977.19, which is lower than $1000, so I'll just pay out $1k for this tranche.
2. LP bond 60k
Starting capital: 60k
Invested capital (inclusive of comms): $59,699.66
Cash accumulated from payout of holdings: $2184.94
Paper gain (loss) from drop in market price of holdings: ($498.66)
Total portfolio gain (loss) : $1,686.28
Total portfolio % change: 2.81%
Cash payout so far: $600
For this bond, it's a semi-annual payout. I've already distributed $600 in the middle of this year. Going by the same policy of 70% of net portfolio gain or 2% of 60k ($1.2k), whichever is higher,
70% of $1,686.28 = $1,180.40, which is lesser than $1200, so I'll just pay out $1.2k. However, I've already distributed $600 earlier, so this time, it's only another $600.
It's not easy to run a fund that promises a guaranteed payout of a fixed percentage and yet there's capital guaranteed. The returns are not fantastic, but I must remember what the risk profile of my parents are and what are their goals. They initially just wanted to get into a fixed deposit, which pays about 1.2% or 1.3% at that time but I thought they are not doing their money justice. Hence, I offered to do this for them. Hence my benchmark should be the long term fixed deposit rate. As long as I can do better than the fixed deposit rate, I should run it for them, if not, I might as well cash out, have less trouble and not bounded by my own guarantee!
They are still interested to invest with me (another 100k plus minus!), but too bad, closed shop liao. LP guaranteed bonds is officially over! If they want to invest with me, it'll be LP equity fund LOL! Equity funds means bo bao capital, and if the market tanks, they will bear the loss. I need to highlight that to them haha :) For LP bonds, it's low guaranteed returns and capital guaranteed, maybe for LP equity funds, it'll be medium guaranteed returns but no capital guaranteed...see how lah