I'm hearing alot about corporate bonds lately.

dunstonh

Henderson pref and bond is quite a bit higher risk than the sector average. A rough rule of thumb is that higher risk does better in good times but worse in bad times (its not a 100% rule by a long shot but its a good generalisation).

Inv Perp Monthly income plus is also higher risk than sector average as well. So, switching to that for the reasons you give wouldnt be worth it.

zedyy

How much should I be looking to throw in for someone testing the waters?

zedyy

dunstonh wrote: »

Depends on whether you are looking at the actual bonds or bond funds. It also depends on what tax wrapper you want to hold them in (unwrapped, ISA, Unit trust, investment bond or pension).
.

Probably an ISA. If i put it into a bond i have to wait for it to mature as opposed to a bond fund where i can pull out on my own accord right?

ANGLICANPAT

Mmm. The Henderson one seems to have been dragging its feet though compared to its sector - or when they quote a sector average , perhaps they dont take into account that some funds are higher risk than others? If Perpetual is also high risk , Hendersons is certainly a bummer compared to it.

autopetfeeder

I'm still not clear what the differences and advantages/dissadvantages are between buying bonds directly and from bond funds.

I actually tried for buy 5 bonds (in Segro 17Feb 2010) via Selftrade about a week ago but was put off. The automated system didn't allow me to purchase even though this particular bond is supposed to be supported for online dealing.

When I rang up, the friendly chap in the call centre didn't know how to proceed and forwarded me to a somewhat stuck-up "dealer". This chap told me that he could offer the bond to buy at a rate of £102 even though selftrades' site showed the price at close to 98. When I enquired what the yield would be at £102 he simply said he didn't know! I declined to go any further.

I got the feeling he was far more used to dealing in £5M deals than the paultry £5K I had to offer

I added the cash to a Fidelity bond fund instead but I'm slightly frustrated that I appear to missing out on these high yielding bonds directly. Should we little people be happy with bond funds or are there good profits to be made inveting directly? And how can one find out the "spread" of bond prices before calling a dealer?

Any comments most gratefully received....

Entertainer

autopetfeeder wrote: »

I'm still not clear what the differences and advantages/dissadvantages are between buying bonds directly and from bond funds.

I actually tried for buy 5 bonds (in Segro 17Feb 2010) via Selftrade about a week ago but was put off. The automated system didn't allow me to purchase even though this particular bond is supposed to be supported for online dealing.

When I rang up, the friendly chap in the call centre didn't know how to proceed and forwarded me to a somewhat stuck-up "dealer". This chap told me that he could offer the bond to buy at a rate of £102 even though selftrades' site showed the price at close to 98. When I enquired what the yield would be at £102 he simply said he didn't know! I declined to go any further.

I got the feeling he was far more used to dealing in £5M deals than the paultry £5K I had to offer

I added the cash to a Fidelity bond fund instead but I'm slightly frustrated that I appear to missing out on these high yielding bonds directly. Should we little people be happy with bond funds or are there good profits to be made inveting directly? And how can one find out the "spread" of bond prices before calling a dealer?

Any comments most gratefully received....

http://www.bondscape.net/#

Click on closing prices. Unfortunately, spreads are wide, as you can see.

dunstonh

I'm still not clear what the differences and advantages/dissadvantages are between buying bonds directly and from bond funds.

Buying a bond gives you no diversification. A bond fund is made up of a range of funds and there are funds in a range of sectors giving you a choice of risks and objectives. You can also mix and match very easily with low investment amounts.

purch

I'm still not clear what the differences and advantages/dissadvantages are between buying bonds directly and from bond funds

If you buy and hold a Bond itself, and intend to hold to maturity you know at the outset exactly how much ££ you will end up with.

There is no risk of the value of your holding fluctuating.

However you do assume all the default risk.

If you buy via a Fund, there is no maturity, so when you want your ££ you are at the mercy of the Fund valuation at that time.

The main differences between the two avenues, really depends on your strategy.

If you want certainty of Income level and/or maturity value, and you are happy with assuming the default risk then a direct holding could be the best strategy.

If you are trying to diversify a portfolio, then a Fund could be the best strategy.