Questions of the week – banks, Sydney Airports and Transurban

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Question: My SMSF is in pension mode, invested in equities apart from a small amount of cash. My primary aim is income with some capital growth to keep up with inflation. I hold Sydney Airport (SYD) and Transurban (TCL) in my portfolio and wonder if I should be considering selling as what I am hearing is that these "bond like" shares will not perform well in the near future. I have a 24% gain on SYD and 14% on TCL.

Answer: While both Transurban and Sydney Airport Holdings are characterized as “bond style” investments, I think this is misleading because both stocks are strongly growing their revenues (and distributions). They are quite leveraged, but at least in Transurban’s case, fully hedged. So, the interest rate risk comes down to a rollover on maturity risk.

I think market panic like the past few days creates opportunities. I am a huge Transurban fan, so I bought some earlier this week. Sydney Airport is a little different, and the best days to sell might be behind you, but again, I don’t think I would be rushing to sell.

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