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Corporate Bonds
Comments
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The replies are appreciated because I was given and took similar advice a couple of years ago by a Halifax FA but for over double that amount, £140k
I get a return of £6k a yr from it but looks to me as though its lost £40k if I was to sell them now, is this correct ?
Should I hold on to the Bonds or what ?0 -
Would be interested to see the graph Millpond was shown by the Halifax rep. The Halifax Corporate Bond fund has lost 16.4% over the last year, lost 16.6% over the last 3 years and lost 4.4% over the last 5 years. Maybe it was upside down
Figures for the average fixed interest UT are shown as -8.9% -7.8% and +3.7% over the same periods.
Ref:http://www.trustnet.com/ut/funds/perf.aspx?txtSearch=&btnSubmit=Search...&universe=ut&btnGo=%3CSPAN+class%3DbuttonLeft%3E%3CSPAN+class%3DbuttonRight%3EGo%3C%2FSPAN%3E%3C%2FSPAN%3E&nsUniverse=UT&sort=5&ss=0&columns=&view=price&page=0&booIMA=0®1=all&sec=fin&ima=all&unit=all&type=all
My Invesco Perp has lost over 20% in the last few months, all I can say is the bonds are a lot cheaper than they were.'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
How do you lose money with bonds? I thought you put money in and whatever rate you buy them at stays like that until maturity?0
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How do you lose money with bonds? I thought you put money in and whatever rate you buy them at stays like that until maturity?
The market is scared and building in defaults equal to what happened in the 30's and worse. They are looking good value, having said that I wouldn't be buying through the Halifax. In addition bonds will move inversely to interest rates, i.e. if you hold a bond with a yield of 12% and interest rates drop to 1% the bond should increase in value.'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
Depends what the yield is, I shouldn't think they will go bust. Does anyone know if they can default without going bust? The following article comments on Corporate bonds in general.
Just wondering if he meant Halifax corporate bond fund or Halifax Bonds (i.e. their own issued bonds).
yesterday Lex comments in the FT. For info.
Corporate bonds
Published: November 19 2008 09:21 | Last updated: November 19 2008 19:55
It may be technical, it may be an abnormality. But it is a gift horse nonetheless. Corporate bonds are trading more cheaply than credit default swaps. That means investors can buy a bond and then receive a coupon that more than pays for the cost of insuring that bond against default. This is close to free money.
Normally, CDS spreads trade wider than cash bond spreads. First, because investors short credit by buying default protection; that pushes CDS spreads wider. Second, corporate bonds are typically viewed as attractive to hold because they can be used as collateral for funding. That narrows spreads on cash bonds.
Before anyone rushes out to insure their corporate bonds by means of a credit default swap (cds) it might be worth mentioning that these are according to my broker anyway, only available for bond amounts over ten million dollars nominal .
Still interested ?0 -
Before anyone rushes out to insure their corporate bonds by means of a credit default swap (cds) it might be worth mentioning that these are according to my broker anyway, only available for bond amounts over ten million dollars nominal .
Still interested ?
May be useful for the large bond funds, e.g. the Halifax fund (if they know what they are doing).'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
How do you lose money with bonds? I thought you put money in and whatever rate you buy them at stays like that until maturity?
If you hold the bond to its full term and the company doesn't go broke you haven't lost money in absolute terms
However the current market value can fall, companies do go broke and interest rates do rise. Inflation is also a factor, you could in real terms lose money by holding a bond especially those 2% ones when inflation is at 5%
Bit better then shares which can halve in value without external factors as the company issues 100% more shares.
RBS is issuing more then 100% shares soon, so their value is a quarter of a couple months ago.
I presume their bonds, if they have any, have not done quite so badlycaveat_emptor wrote: »No, just impossible to answer as it depends on future performance. But asking Halifax advisor was not a good place to start.
You can judge the risk today and based on a man retiring will need the money short term to live off, it sounds like terrible advice to me and not secure at all.
Those guys are salesmen, it ranks alongside going to a random used car lot to find out which car is best0 -
The replies are appreciated because I was given and took similar advice a couple of years ago by a Halifax FA but for over double that amount, £140k
I get a return of £6k a yr from it but looks to me as though its lost £40k if I was to sell them now, is this correct ?
Should I hold on to the Bonds or what ?
The advice to hold bonds a couple of years ago, as interest rates were about to rise (and is was expected) esp with no diversification was probably bad advice as bonds tend to perform poorly when interest rates rise.'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
sabretoothtigger wrote: »If you hold the bond to its full term and the company doesn't go broke you haven't lost money in absolute terms
However the current market value can fall, companies do go broke and interest rates do rise. Inflation is also a factor, you could in real terms lose money by holding a bond especially those 2% ones when inflation is at 5%
Bit better then shares which can halve in value without external factors as the company issues 100% more shares.
RBS is issuing more then 100% shares soon, so their value is a quarter of a couple months ago.
I presume their bonds, if they have any, have not done quite so badly
You can judge the risk today and based on a man retiring will need the money short term to live off, it sounds like terrible advice to me and not secure at all.
Those guys are salesmen, it ranks alongside going to a random used car lot to find out which car is best
If a bond fund can insure away the default risk (I think you have seen the Lex Article above), I think they could be pretty good buy going forward (yields 12%+), but obviously as part of a portfoilio and probably not for someone who requires short term surety'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0
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