Buying GILTS and holding to maturity in an ISA with Interactive Investor

JamTomorrow

I haven't held GILTS directly previously and have invested in Bond funds.

Now looking for some short-term certainty on return on some of my holdings in an ISA with II and want to check my thinking is correct.

From reviewing data at Tradeweb it looks like the GILT below has a ~5.2% yield if I hold to maturity on 7th September 2024.

Is it just as simple as I purchase that ISIN code (GB00BHBFH458) on II and hold to maturity and in just under 13 months time I would have secured a return of ~5.2% (unless Govt goes broke)?

Thanks.

aroominyork

Yes. And since I cannot post a three character answer here is a nice link for current bonds and yields https://www.dividenddata.co.uk/uk-gilts-prices-yields.py.

PS  Your wording "a return of ~5.2%" might suggest a composite return rather than annual yield. Annual yield will be ~5.2% but composite return in a year and a few weeks will be just over 5.5%.

quirkydeptless

Yes                 

valiant24

JamTomorrow said:

I haven't held GILTS directly previously and have invested in Bond funds.

Now looking for some short-term certainty on return on some of my holdings in an ISA with II and want to check my thinking is correct.

From reviewing data at Tradeweb it looks like the GILT below has a ~5.2% yield if I hold to maturity on 7th September 2024.

Is it just as simple as I purchase that ISIN code (GB00BHBFH458) on II and hold to maturity and in just under 13 months time I would have secured a return of ~5.2% (unless Govt goes broke)?

Thanks.

I was recently accepted onto the approved list of direct purchasers of Gilts.   They sent me the list of Ts and Cs.   There's a 0.7% commission for buy and sell, minimum £12.50.

I'm unclear now why I'd bother.   I can buy and sell for £5 on iWeb, and then don't have the faf of looking after the certificate, or posting stuff to sell.

Am I missing something?  Will iWeb have a large bid/offer spread that somehow makes them more expensive?  On the couple of trades I have done with iWeb the differential between the price I got and the quoted mid-market one in the FT was minimal.

ChilliBob

Yeah, in a GIA and not an ISA that's, what I have been doing on II too. TN25 and T26a in my case.

Approved purchaser? That sounds a, bit naff if you need to pay so much for each trade and a % commission? Why would anyone want to do that if £5 or something is the alternative?

Iweb wise, I think you need to phone to buy gilts no?

aaj123

Buying gilts is akin to locking in a fixed rate for the period in question although unlike the case of doing this via a fixed rate deposit, here you get early access (via liquidation) which can come either with a profit or loss on your invested capital. 

DeLaSole

Quick Q: If you buy an individual IL gilt on ii, for example, is there a an ii sell fee at maturity? Thanks.

masonic

DeLaSole said:

Quick Q: If you buy an individual IL gilt on ii, for example, is there a an ii sell fee at maturity? Thanks.

There is a trading fee if you sell it, but not if you leave it to mature.

DeLaSole

masonic said:

DeLaSole said:

Quick Q: If you buy an individual IL gilt on ii, for example, is there a an ii sell fee at maturity? Thanks.

There is a trading fee if you sell it, but not if you leave it to mature.

Much appreciated, masonic.

Best wishes.

valiant24

ChilliBob said:

Yeah, in a GIA and not an ISA that's, what I have been doing on II too. TN25 and T26a in my case.

Approved purchaser? That sounds a, bit naff if you need to pay so much for each trade and a % commission? Why would anyone want to do that if £5 or something is the alternative?

Iweb wise, I think you need to phone to buy gilts no?

Not exactly.  In my limited experience, you go to place the order online as you would with a popular equity, it then pops up a message saying that no online quotes are available but if you care to click "Continue" their dealers will execute the order at best.   In each case for me, within 20 minutes or so that order has been completed and the Gilt ready to view in the portal.   No phone call required.

Aminatidi

JamTomorrow said:

I haven't held GILTS directly previously and have invested in Bond funds.

Now looking for some short-term certainty on return on some of my holdings in an ISA with II and want to check my thinking is correct.

From reviewing data at Tradeweb it looks like the GILT below has a ~5.2% yield if I hold to maturity on 7th September 2024.

Is it just as simple as I purchase that ISIN code (GB00BHBFH458) on II and hold to maturity and in just under 13 months time I would have secured a return of ~5.2% (unless Govt goes broke)?

Thanks.

Yes but keep in mind the capital gain is free whilst the coupon may attract tax.

It's why low coupon gilts are popular right now.