any suggestions for shorter bonds

Where would people suggest putting excess cash, which I don't want to allocate to equities.

I was looking at TSC5 5%, matures 21/11 which depending on price you pay (100.9) seems to equate to 3.25%. It is Tesco Finance credit.

or

PAG1 6% which you can get for just below par, matures 5/12/20. Clearly much higher risk with Paragon but a fair chunk of equity to go through first.

Or, if anyone has suggestions for prefs which are reasonably liquid. I have never touched these before,
AV.A was mentioned on a similar forum which is about 6.4% cumulative, apparently irredeemable at least until 2026 but with all those associated risks.

Any suggestions appreciated!
«1

Comments

  • You could take a look at LAD2 5.125%, redemption date 16/09/22. GVC share price is on the up and up. I topped up with these a few weeks ago. It all depends on the buy price that you can get though, as the published spread on all bonds is very wide at the moment
  • edited May 23
    Maybe try to pick something which diversifies the rest of your portfolio, in terms of single name risk, industry risk, economy risk, duration risk.

    As Euro17 mentioned, there is liquidity risk as well, so if you have enough spare cash, you can try to dime the bids for all the names on your shortlist and see which one you get execution first and cancel the remaining ones.

    Looking at the charts of all the above names, they all look pretty correlated, so Euro17 might be right on the execution quality driving the actual returns. If you dime the bids and get an execution, you could try to capture that extra liquidity alpha.
  • Congrats Arjungaur, you are getting the hang of just replying to the question asked without any extras.It's easier this way for all involved without any emotional pressure !
  • pdepp, I believe that the pref share debacle might move to a new phase fairly soon as I think there is another review quite imminent on the Aviva /general pref share situation. If you are erring on the side of prefs might be worth waiting a while but of course do your own research as normal. This might be a golden chance before the review resuts are known.?
  • edited May 23
    Congrats sussexmade, somebody here finally demonstrated an understanding of 'emotional pressure', after having me repeat that 12 dozen times, haha

    Guilt, Anger, Shame, Disappointment

    Frustration, Anxiety, Sadness, Embarassment

    There is no shortage of emotional weapons we are constantly deploying all day long and of course decreasing performance all around : )

    What's the story with Aviva/general pref share situation
  • Euro17, yes will look at LAD2, thanks

    Arjungaur, can I ask how you access the order book, do you have direct market access and can leave limits? I use HL which basically give you a bid and offer, normally within the LSE published spread and you have 15 seconds to accept or not. I have never even tried to leave a limit order with them as I think the price would probably move against you and I am not even sure how HL handle them, for example which market makers they are shown to if any.

    Sussexmade, as mentioned I have never touched prefs, I have vaguely followed the situation from a distance, might I ask which ones you would suggest looking at?
  • pdepp-at the moment I don't have any meaningful holdings in prefs of any class as I really see them as an extension to ordinary shares but with a bit more spice. As I said before I am sure I read in some financial journal/paper within the last week or so there was a suggestion that there was/is to be an announcement fairly soon by i think the FCA. Since Aviva I have left prefs alone. I have to admit I cannot now find the newspaper article having put the papers out for re-cycling. ! Anyway Arjungaur is the fountain of knowledge so if it's out there he will find it.
  • The comment re prefs is a concern.We all know what happened when Aviva tried it on. All prefs suffered losses and have never recovered It would be nice if anybody has any info on this.
  • Liquidity seems to be a major problem at the present, last week I tried to de-risk by hoping to sell some my Burford 2022 6.5% bonds - the bid price was 91.90, with mid price being 95.33, offer 98.75. Therefore unless you are hoping to retain them to maturity, best avoid.
    Still holding a few others - shorter maturities one are
    A2D1
    PFP2
    Other possibilities are more Equity eg infrastructure & Renewable funds
    Recently added as few gold equities - CMCL, PAF & HGM , as gold mining companies tend to do well in major recessions / depression. Unemployment rate is a disaster in the USA
    Re Prefs, sold mine due to likely claims (life assurance deaths / business interruption) in the insurance industry (AV1, RSAB), and banking (bad debts on loans) due to Covid-19, (SAN1, LLPC, NWBD, BOI)
    Not the best environment for investors, holding cash may be best, and pick some good investments when the markets turns negative again
  • IG and InterTrader do DMA (direct market access) on equities, I don't know if any provider provides access to the order book of retail bonds. I wouldn't be surprised if nobody wants to, given they want to earn wide bid-offers from suckers trying to trade these.

    You are right, leaving limit orders means you are likely to get filled against a trending market, so limit the limit orders in the direction of the trend, of course trends reverse all the time and so keep an active eye on the price action

    There is an order handling policy, maybe there are some details there https://www.hl.co.uk/terms-and-conditions

    The more your order is visible to other people, the better chance of someone filling it, order visibility is only problem for larger orders which scare away the other side : )
  • edited May 24
    High Unemployment rate in US is a result of flexible labour laws, that flexibility thus increases adaptive performance for both the employee and the employer, thus what might seem as a disaster from far away is actually very useful in the form of Creative destruction - https://en.wikipedia.org/wiki/Creative_destruction

    This is a great environment for investors as global businesses are on sale due to a very temporary 'recession by proclamation'. Now obviously the discount has narrowed in last couple of months, but with the reduction in frictional costs, there are more opportunities accessible than ever - https://www.trading212.com/en/isa

    There are no guarantees markets are going to turn negative again, Holding cash in excess of next couple years of budgeted use is probably going to be a drag on your overall long term portfolio returns, Cash is Trash -

    https://markets.businessinsider.com/news/stocks/i-still-think-cash-trash-ray-dalio-dismissed-dollars-reddit-2020-4-1029079224




  • shaunm, thanks for the FT article interesting reading. There certainly is a range of opinion out there.! pdepp I have managed to sometimes beat the quoted spreads by telephone dealing and even with the higher brokerage charge ( HL £50.00 v. £11.95 ) it's been worth it. If your bid/offer isn't accepted there is no charge.

    BTW shaunm are you fruit picking this year ( not low hanging fruit in the stock market ! ) and giving your kayak a run out on the Medway ? Weather would have been ideal the last few weeks though pubs will be open for sure within 6 weeks making it even more interesting maybe.
  • "lend a hand"?? why can the government not realise that harvesting is not a job that appeals to most UK people? Whether that's because it's hard work or perceived as low paid or low paid, hard work?

    Given that overseas workers end up paying not much tax and that almost all of their earnings are taken out of the country the obvious solution is to make earnings to UK people who sign up this year tax and national insurance free.

    Maybe that will get them enough workers to do the job?



  • edited May 25
    They do realise that harvesting is not a job that appeals to most UK people, but they haven't got any better ideas, Brexit obviously doesn't help either.

    They have been steadily raising the tax-free Personal Allowance over the years, though more can be done.

    You can also claim for NI in CJRS - https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme#work-out-how-much-you-can-claim-for-employer-national-insurance-contributions-nics

    Even if you do use financial pressure to get enough workers, you are ultimately decreasing their adaptive performance as well as leading to lower productivity of the overall economy, which makes debt levels less sustainable -

  • Sussexmade, Fruit picking, Clock House Farm informed me on the 14th May that they had filled their vacancies, shame, but I suspect my age was a factor (less nimble fingers could bruise the fruit!). I was looking forward to paddling the upper Medway, real pity. This weekend I should have been on the River Wye with the canoe camping club!
    However over the past few weeks invested time on researching some of the high risk equity players relating to Covid-19, eg NCYT, YGEN, AVCT (now sold at profit, too high a risk), EKF, TSTL, BYOT and BVC. Not for the faint hearted!
    Regarding Fixed Income securities, I am increasing using Fill / Kill orders at a specific price with YouInvest, just in case the price is silly. YouInvest, if the order is not accepted, they often call me back indicating an indicative price the market makers would accept, thus I have an option to re-consider the proposal.
  • edited May 25
    Tesco rejects bruised fruits, so do i : )

    All these high risk equity players can serve well for those with large enough well-diversified portfolios

    Next time you can make proposal to YouInvest that they let u access the order book directly, so you and I can transact with other at the mid-price : )
  • shaunm, that's a pity re Clock House but uplifting to hear that they have staff. Maybe you should have asked to work in payroll where you couldn't do any damage ?! I hear ( quite unofficially ) Dom Cummins has been spotted dead heading strawberry flower heads.

    Your share researching sounds interesting re Covid but all too speccie for me at my tender age. Maybe we should all follow the governments proposed sovereign wealth fund and invest where they do-what could go wrong ?!

  • edited May 26
    Plenty could go wrong, since when did government become a better change agent than the private hands

    https://www.thisismoney.co.uk/money/news/article-8351337/Britains-plan-25bn-sovereign-wealth-fund.html
  • Arjunaur, thanks for the link
    The Conservatives, part-nationalizing British Industry, what a big surprise! (but under a different name)
    Sovereign Wealth funds are usually set up by Nations with "Abundant Resources"
    I can see this "back-firing" in a spectacular way in 3 or 4 years time when the nation's coffers have run dry, perhaps to be known as "Abundant Drainage of UK public resources"
    Re Mr Cummins - Instead of 50,000 Excise-men on our border posts, we could have an extra 50,000 to support the NHS!
    Governments of today don't seem to be taking in the best skilled people available?
    BR final exit seems to be a disaster waiting to happen.
    Ps Payroll, my last employment, this was outsourced to a small organisation, for £66 per month (25 staff), it wasn't worth doing it "in-house", also I had limited skills!
  • IN GENERAL REGARDING INCOME-see The Telegraph of Friday 22nd May Questor income portfolio by Richard Evans. He has a number of suggestions on an income fund which contains Regional Reit, Triple Point comments along with quite a few others. Interestingly his target income for his fund is a conservative 5% but reasonable safety is part of the theme. Worth a read.
  • edited May 26
    Not sure what you think of as "shorter" but FYI the least duration stuff I hold is

    ENQUEST PLC 5.5% SNR EMTN 15/02/22 GBP
    PARAGON GRP OF COS 6% EMTN 05/12/2020 GBP100'1
    PRINCIPALITY BS 7% PIBS PERP GBP1000 (scratch that, will be called this yr, I see in other thread)
    SEVERN TRENT 1.3% IDX LKD 11/7/22 GBP100
    TESCO PERSONAL FIN 5% MTN 21/11/2020 GBP100
    CO-OPERATIVE GROUP 11% SUB NTS 18/12/2025 GBP
    Burford Capital 2022 6.5%

  • edited May 26
    Boris wants hard Brexit and so any distractions like virus or any performance improvement plan like Sovereign Wealth Fund to alleviate the obvious coming pain is on table

    You could have open borders like Europe or close borders like North Korea, it's a mistake to have excise men on borders

    Govt has lot of inertia/bureaucracy, so they should delegate more to private hands with better skills and more flexibility

    5% target income is not conservative in zero rates world, any higher and it'll be competing with Junk Bonds

    'shorter' examples he listed were TSC5 5% 21/11 and PAG1 6% 5/12/20
  • I ve been watching PAG 1 and 2 for a couple of monthe but can't get a price at par or under. When you factor in the stamp duty and dealing costs it seems to be a negative trade unless buying tens of thousands of them. Fixed income is very difficult at the moment thus I have moved some funds back to equities.
  • Hi Colin, there is a slight inaccuracy that you probably know really, but there is no stamp duty on fixed income investments, you just have to pay the accrued interest.
  • I managed to buy some PAG1 at 98.75 yesterday through HL and thanks Sussexmade I called and got a 15bp better price than was offered online, which still saved a bit of money despite £38.05 higher commission
  • I agree - it's always worth asking your broker if he/she can get inside the spread. I managed to buy some more BUR2 at 88p this afternoon. Bonus is that iDealing don't charge any extra for this service.
Sign In or Register to comment.