Advice on Corporate Bond Investment

fizzypop

Am considering putting £3600 into the Investo Perpetual Corporate Bond via the Hargreaves Lansdown Vantage Stocks & Shares ISA. With a running yield at 7.7% which is variable and not guaranteed what do people think of this type of investment. I see £3600 as a small punt to use up this years ISA allowance of £7200 and would consider adding another £3600 in the new tax year. Thanks in anticipation

purch

what do people think of this type of investment

Prices on the Corporate Bonds themselves are 'historically' quite low at the moment, and whilst the I think some of the claims about a high default risk being priced in are fanciful, some of the Bonds are priced to discount a lot of the risk of default.

If the recession is not as deep as some fear, and we get some recovery towards the end of 2009 and into the start of 2010, then the prices of these Bonds will rise.

If the recession is deeper than expected, and recovery doesn't start for 18+ months, then I believe Corp Bond prices will fall further.

P.S. The amount of 'hype' surrounding Corp Bond Funds currently is not a good sign in my book.

dunstonh

If you are going to do it, then use three different funds across the different fixed interest sectors. Make sure you go for the level of risk that matches your risk profile as they are not all the same risk level.

mr_fishbulb

purch wrote: »

P.S. The amount of 'hype' surrounding Corp Bond Funds currently is not a good sign in my book.

Very popular in December - "Bond funds dominate December Vantage sales":

http://www.investmentweek.co.uk/public/showPage.html?page=834270

But then again H-L have been pimping those funds out a lot in their newsletters, so is it a case of H-L correctly predicting where all their smart investors will be stashing their money, or people are investing there because H-L are promoting them...?

Lokolo

To be fair I believe Mr Fishy has got it right. I was tempted to buy into bonds for my next investment for income which I could then reinvest. I only really thought about this when I got my HL magizine thing back on November.

Still not sure what I am going to invest in next, I need to sort out how I can diversify from my 2 global growth funds!

purch

"Invesco Perpetual's Corporate Bond and Monthly Income Plus funds were among the top sellers, while Neil Woodford's Invesco Perpetual High Income and Income vehicles also featured in the list.
The other popular bond funds included Investec Sterling Bond, Franklin Templeton Global Bond, M&G International Sovereign Bond and Royal London Sterling Extra Yield Bond.
Vantage investors also poured into BlackRock Gold & General and Jupiter Financial Opportunities."

By the sounds of that, HL's customers must read and follow Mark Damptwits advice :rotfl: like sheep !!!!

Lokolo

Well after New Star becoming caput HL said that investors should not put any money in and maybe think about taking some money out just in case, this was in December, since then my NS fund rose 20%! (now 15%, over last week been down around 5%)

Think about how much I would have lost out on on my £300 investment

Also I think I remember dunstonh putting a lot of his clients money into Invesco High Income a while back and it performing very well? (although I now think it maybe was a different fund manager?? But I'm pretty sure it was Invesco??) - sounds like hes going my past performance (Mark, not oh mighty dunston)