Where to buy high interest and low risk income based funds

tedcharse

Anyone know where to buy in UK the following high interest rate, low risk funds:
1) PIMCO GIS Income Fund (USD)
2) BlackRock China Bond Fund (USD-H)
Plus, does the interest received taxable in UK?

coyrls

I don't know in what universe a US$ denominated China bond fund would be considered low risk.

masonic

Those are not low risk funds. You will probably find they are available at the major investment platforms. Interest would be taxable if held outside of a S&S ISA or pension.

maxsteam

Unless you have US interests, I would suggest that investing in anything other than a GBP fund would not be low risk. Also it's unusual to see the words "China", "fund" and "low risk" on the same page. One way to invest is to sign up with a broker, deposit some funds, log in to their web site, find the funds then click the "buy" button. Any reputable broker will ask you a few questions to ensure that you understand what you are doing. You should probably limit your choice of broker to brokers that are members of the London Stock Exchange.
Yes, interest is taxable. Where and how the tax is deducted will depend on your choice of fund. USD funds are likely to be declared on a tax return and taxed when the return is submitted.

tedcharse

I found my interested funds stated in my previous thread have very attractive return, the followings data show my reasonings, do you guys agree?

1)     PIMCO GIS Income Fund (USD)  a) Risk rating 3 out of 7,  b) Year 2020 trailing return 5.51%, c) Dividend yield 3.94%, that is you get 0.32% cash per month into your bank account

2)     BlackRock China Bond Fund (USD-H)  a) Risk rating 3 out of 7,  b) Year 2020 trailing return 5.27%, c) Dividend yield 6.01%, that is you get 0.50% cash per month into your bank account

Those above two funds cannot be found in: Halifax, vanguard and Hargreaves Lansdown websites. Can you guys suggest there are similar fund return per month available in UK? Which brokers can I contact?

By the way, the sterling has risen 7.62% in the last 12 months, it is much wiser to convert the GBP to USD to buy USD based fund. I will expect the USD will rise over GBP after 80% of the USA population has vaccinated. 

HappyHarry

The attractive returns are there for a reason - that is that these are not low risk funds, and are both "4" out of "7" on their Key Investor Information Documents (KIID).  As the KIID explains "The indicator above is not a measure of the risk of capital loss, but a measure of the fund's price movement over time."

Both funds invest heavily in below investment grade bonds, the Blackrock fund especially so. They are both hedged to the USDollar, which adds further risk.

It is unusual for UK investors to hedge their investments to the US Dollar, hence your difficulty in finding them on UK platforms.

tedcharse said:

By the way, the sterling has risen 7.62% in the last 12 months, it is much wiser to convert the GBP to USD to buy USD based fund. I will expect the USD will rise over GBP after 80% of the USA population has vaccinated. 

You are talking about predicting foreign exchange movements, which is gambling, unless you are an expert in these matters. In which case, you wouldn't be on a forum asking where to find below-investment grade bond funds hedged to the USDollar.

Any interest generated would be taxable unless the holdings are within a tax efficient wrapper such as a pension or ISA.

RobM99

High income and low risk?   Lead the stampede!

maxsteam

If your income and expenses are in GBP then opting for a fund that is denominated in anything other than GBP will be likely to increase the risk. There is nothing wrong with speculating on, or predicting, currency movements but you should not kid yourself that it's a safe bet. You will also be exposing yourself to movements in the RMB.
A PIMCO fund, ref IE00B87KCF77, is available on the Degiro platform. There's a BlackRock China Bond fund available on the HL app, it's priced in GBP but it's holdings are mostly priced in USD and RMB.

tedcharse

Thanks guys for your advises!
I start to look for techniques of how to invest safe funds and ETFs.
I saw a fund has the following Portfolio Profile. Is the fund hedging the USA treasury bonds?

US TREASURY 6.125% yield 15/08/2029,   US TREASURY 6.25% yield 15/05/2030,   US TREASURY 6.125% yield 15/11/2027

Voyager2002

tedcharse said:

Thanks guys for your advises!
I start to look for techniques of how to invest safe funds and ETFs.
I saw a fund has the following Portfolio Profile. Is the fund hedging the USA treasury bonds?

US TREASURY 6.125% yield 15/08/2029,   US TREASURY 6.25% yield 15/05/2030,   US TREASURY 6.125% yield 15/11/2027

Have you considered opening a Post Office savings account? Or even investing in premium bonds?

Linton

tedcharse said:

Thanks guys for your advises!
I start to look for techniques of how to invest safe funds and ETFs.
I saw a fund has the following Portfolio Profile. Is the fund hedging the USA treasury bonds?

US TREASURY 6.125% yield 15/08/2029,   US TREASURY 6.25% yield 15/05/2030,   US TREASURY 6.125% yield 15/11/2027

Sadly this does not mean that these investments are yielding around 6%.  They would have yielded around 6% when issued but since then their price will have risen so that the effective yield is much lower.

For example, looking at UK Gilts there is a £100 6% bond maturing in just under 8 years time.  The snag is
1) It would cost you £143 to buy which means the effective interest rate is 4.2%.
2) When it matures in 2028 you will only get £100 returned, so a capital loss of £43.
3) These two figures can be combined to give a Yield to Maturity of 0.63%

As others have said there are no high yield low risk investments available.  You can have one or the other but not both.