Corporate bond dividend drop

dunstonh

Which is why the FSA are forcing through a sea-change to the way IFAs operate under the 'RDR' for 2013.

No its not. The RDR is changing the whole retail area not just IFAs. The hardest hit will be tied agents, not IFAs. Many IFAs already work on the basis of the post 2013 rules are in the process of moving towards it.

But many would beg to differ, including Paul Lewis of the BBC Moneybox programme and many other more objective observers than IFAs themselves: http://www.web40571.clarahost.co.uk/...071105FSRF.htm .

Not one mention of IFA in that article. It refers to FAs and sales based models. Certainly nothing to suggest that FOS complaints figures are wrong.

But many would beg to differ, including Paul Lewis of the BBC Moneybox programme and many other more objective observers than IFAs themselves: http://www.web40571.clarahost.co.uk/...071105FSRF.htm .

Journalists are hardly objective. Good news is no news. They only want bad news and they love to focus on the minority.

DiggerUK

Ranger8, you are invested in the worst place to be, due to the way monetary inflation eats in to the real worth of Corporate Bonds, (CB's).
The majority of CB's are fixed rate return, which is all fine and dandy when inflation goes down and the returns get further and further ahead. This happened last year and led to them being in high demand, boosting CB prices by those desperately seeking a return on their money.
Downside is that the returns are now heading south at a rate of knots, because the rate of inflation is going north.

Plus you have the danger that a lot of the CB's in the fund you hold can be called in, referred to as the "Call Risk". Have a read in the 'Other Risks' section in this piece from Investopedia. A good site for your Favourites list as they give explanations of financial phrases that you may not have heard of.
http://www.investopedia.com/articles/03/110503.asp

By the way, there is no such thing as a stupid poster or a dumb question on the net. Best of fortune.

LongTermLurker

By the way, there is no such thing as a stupid poster or a dumb question on the net. Best of fortune.

I've seen one or two, but the OP's isn't one of them!

Lokolo

DiggerUK wrote: »

Ranger8, you are invested in the worst place to be, due to the way monetary inflation eats in to the real worth of Corporate Bonds, (CB's).
The majority of CB's are fixed rate return, which is all fine and dandy when inflation goes down and the returns get further and further ahead. This happened last year and led to them being in high demand, boosting CB prices by those desperately seeking a return on their money.
Downside is that the returns are now heading south at a rate of knots, because the rate of inflation is going north.

Plus you have the danger that a lot of the CB's in the fund you hold can be called in, referred to as the "Call Risk". Have a read in the 'Other Risks' section in this piece from Investopedia. A good site for your Favourites list as they give explanations of financial phrases that you may not have heard of.
http://www.investopedia.com/articles/03/110503.asp

By the way, there is no such thing as a stupid poster or a dumb question on the net. Best of fortune.

The OP is investing in a Corporate Bond Fund, not individual Corporate Bonds.

JamesU

Lokolo wrote: »

The OP is investing in a Corporate Bond Fund, not individual Corporate Bonds.

Pedantic point maybe, Digger's comments still probably relevant.

Ranger, how is your Corporate D inc fund invested at Halifax (ISA, non-ISA, Collective Investment Scheme etc?). Have you tried to work out the % annual return based on the initial investment?

JamesU

Lokolo

JamesU wrote: »

Pedantic point maybe, Digger's comments still probably relevant.

Ranger, how is your Corporate D inc fund invested at Halifax (ISA, non-ISA, Collective Investment Scheme etc?). Have you tried to work out the % annual return based on the initial investment?

JamesU

It was only because Digger said in his second line that CB's have a fixed rate of return, which although is totally correct, it's not really applicable in this case lol.

agsnu

Lokolo wrote: »

It was only because Digger said in his second line that CB's have a fixed rate of return, which although is totally correct, it's not really applicable in this case lol.

A fixed rate of return if held to maturity, ignoring counterparty risk...

DiggerUK

Ranger8, I have reviewed what I wrote, and stand by my post.

I suspect if you were to get a valuation to cash in, it will be higher than when you purchased. If you can cash out, I advise you to do so, as most bonds have risen in price over the last year and your fund valuation could reflect that, even though the returns are down.

Ranger8

DiggerUK wrote: »

Ranger8, I have reviewed what I wrote, and stand by my post.

I suspect if you were to get a valuation to cash in, it will be higher than when you purchased. If you can cash out, I advise you to do so, as most bonds have risen in price over the last year and your fund valuation could reflect that, even though the returns are down.

I`ve had the bond plan about 5yrs and know there wasn`t a maturity so I will see about cashing the bonds (believe it or not I invested £140k in the one plan)
Problem is where to put the money then ?
(Believe I`m an idiot now?)

Lokolo

Ranger8 wrote: »

I`ve had the bond plan about 5yrs and know there wasn`t a maturity so I will see about cashing the bonds (believe it or not I invested £140k in the one plan)
Problem is where to put the money then ?
(Believe I`m an idiot now?)

Why don't you just invest over a number of different Bond Funds?

http://tools.morningstar.co.uk/uk/fundscreener/default.aspx?LanguageId=en-GB

Use this to select the sort of funds you want. In the IMA Sector you can choose Corporate Bond, High Yeild or Strategic Bond.

Choose risk.

Then choose some funds. Pick around 20. Obviously they don't ALL have to be Bond Funds, they can be some UK equity if you want to risk some more for part of the money. Then create a basic porfolio...

5% Fund A
10% Fund B
10% Fund C
etc.