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Thread: BeeBop does UK

  1. #91
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    BeeBop many thanks, will do.

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    Quote Originally Posted by SBQ View Post
    My preference is holding USD in these turbulent times. Can't say much about the GBP as it's been relatively flat to the NZD for the past 5 years, though there's more potential for the GBP to plummet over Brexit.

    School fees? What's wrong with public schools?

    The NZD is weak to the USD because the NZ economy isn't doing well and potentially we could see under $0.50 in the next 2 - 5 years. How does this translate to the person that has lots of USD or GBP cash? Well you may benefit on the exchange rate but you realise that you do live in NZ and everything you consume and do will go up in price. Inflation is tied to NZ's currency because we simply can't produce everything and since most imported products are based in USD, the retailers are forced to raise prices, and thus inflation becomes a problem.

    On the grand scheme, NZ residents won't be doing as well as overseas residents like in N. America. We are plagued with over-regulations, FMA, FIF, AML, etc. The only charm NZ has left is investing in real estate, where the gains can be tax free. But for most places around the world, the principle residence is tax free.
    If you read my "chats" you will know that I am not based in NZ and I have distinct reasons for GBP.

    As for government schools....many countries do not have the general privilege that NZ has with mostly fantastic schooling. If my kid was to go public here, she would be fully covered (except for face) and the international schools are an "expat bubble"....no dirt, no independence, and extremely restricted subject choices (great for a budding engineer, doctor, or lawyer, but not a budding farmer or "world famous actor/ress").

    Prior to Brexit hitting the headlines, I did 'store" USD but now the chance to gather GBP has been too good. Further to that, buying NZD directly has been superb. Unfortunately, I am not a quick enough, nor smart enough, expert to figure out how to optimize my USD/GBP/NZD opportunities.

    And yes, NZ residents are not doing as well. We were kind of encouraged off-shore as there were no good employment options for us unless we wanted to enjoy the "lifestyle". Just chatting to another academic who has finally decided to leave NZ's fair shores after decades of funding grant applications...offered a place in a great institution and no funding to apply for...get on with the job taking a longview.

    So, I DON'T live in NZ and probably another poster or two (on this particular thread) do not live in NZ. But one day, our cash will come back, our spending will be there and hopefully I can return a well educated (at personal as opposed to tax payer cost) young person who believes they are going to work in the agricultural or marine sector.

    By the way, I see your location is ChCh: I spent a couple of months there late last year - fantastic city now!

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    I like this thread - I always learn something.

    Like BeeBop, I have an actual use for actual pounds to buy actual stuff, so this has been a good year to accumulate them.

    I also hold other currencies as cash (AUD CAD CHF SGD and USD) - mainly as insurance against the arse falling out of the GBP or NZD (or indeed both).

    No, the cash doesn't pay well (or pay at all for the CHF), but insurance always costs.

    Thanks for the Investor's Chronicle it looks interesting, and I suspect we'll all need all the help we can get with the UK in the near future.

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    I wonder what next week will hold for Brexit. BeeBop is doing a little "family" holiday to the UK and Ireland.....crossing back from Ireland to Northern Ireland on the 31st (to avoid any issues)....on to London on the 1st.....Prepaid most of the holiday costs when the GBP was down at 1.23-1.24....we shall take any currency opportunities on offer

    Must explore Whitbread shares again....as constantly using the Premier Inn chain....GBP30-40 per night, can't be beat, although I am sure my entire global human network partake in the PI T4 at Heathrow (even works well as a London base if One can be bothered with a 40 min underground journey costing GBP3.20): take that as a London travel tip and use SIXT rental car which is very close and saves using shuttles (but only ever book when you are on a UK VPN to ensure you don't get caught with the extra insurance charge on collection).

    I wonder which way Brexit will swing?

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    Quote Originally Posted by BeeBop View Post
    I wonder what next week will hold for Brexit. . . . . . . . I wonder which way Brexit will swing?
    Too many people have too much invested in Brexit for it to be allowed to come to come to any conclusion this early in the piece.

    On the bright side, I expect your Vodafone UK SIM card will continue to work in Ireland and the rest of the EU just as seamlessly as it currently does for some time yet. . .

    In the meantime, I have to decide what to do with a swag of pounds. GBP invested as GBP in the UK economy, or GBP invested elsewhere in the world in a GBP-denominated ETF or fund.

    Possibly hedged by some other currency invested in the UK via a CHF/Euro/USD/whatever-denominated fund.

    Or buy palladium again?

    The possibilities are endless.

    Travel safe.

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    Quote Originally Posted by BeeBop View Post
    ...Must explore Whitbread shares again....as constantly using the Premier Inn chain....GBP30-40 per night, can't be beat, although I am sure my entire global human network partake in the PI T4 at Heathrow...
    What I particularly like about PI T4, apart from being able to keep your Airport luggage trolley in your room, is the range of discounts, specials & freebies available in the restaurant that the promise of a reasonable tip reveals.

    I can recommend SIXT, Avis (I still get a special business rate from them) and Enterprise can be very competitive for medium term rentals.
    om mani peme hum

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    Quote Originally Posted by Snow Leopard View Post
    What I particularly like about PI T4, apart from being able to keep your Airport luggage trolley in your room, is the range of discounts, specials & freebies available in the restaurant that the promise of a reasonable tip reveals.

    I can recommend SIXT, Avis (I still get a special business rate from them) and Enterprise can be very competitive for medium term rentals.
    Snow Leopard....maybe PI T4 will serve up as a ShareTrader meeting point! I shall check out Enterprise’s medium term rates....I like their wee Vauxhall Adam cars...much better than the Fiat 500s if I am getting a city car.

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    Quote Originally Posted by GTM 3442 View Post
    I had to move quite fast yesterday to get shot of these two bond ETFs and lock in the gains when the GBP went above USD1.24. I hope that it's not a one-day wonder!

    I left the money in the GBP-denominated S&P500 ETF though.

    Now comes the issue of what to do with all those pounds. . .
    GTM

    What did you decide to do with your GBP, or have you kept it in your S&P500 ETF (which also will have done well over the past week or so)? I was checking out your EFT bond funds that you sold....if I am correct, your timing was impeccable!

    BeeBop

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    Quote Originally Posted by BeeBop View Post
    GTM

    What did you decide to do with your GBP, or have you kept it in your S&P500 ETF (which also will have done well over the past week or so)? I was checking out your EFT bond funds that you sold....if I am correct, your timing was impeccable!

    BeeBop
    Hi BeeBop.

    Yes, good timing.

    I have been dithering about those pounds, and have done nothing but think.

    I have read and heard from a lot of people that come Brexit Day, the arse is going to fall out of the UK financial markets, and that the pound will sink like a stone.

    I'm not so sure. I think that there is as much uncertainty in the air as there is pessimism, and I wouldn't be surprised if things went the other way - with a rise in the UK markets, or the pound, or both.

    So there is a lump of pounds looking for a home. I'm just too undecided to take a bet on of what will happen should Brexit ever happen. Let alone a Labour victory in the upcoming election. I don't think Jeremy can win, but I do think that Boris can lose.

    So I have the FTSE in pounds
    VUKE Vanguard FTSE100

    and also pounds in:

    IH2O iShares Global Water ETF
    IHCU iShares S&P Healthcare
    VUSA Vanguard S&P500
    Also Diageo (I'm trying to drink myself rich on duty-free whisky)


    But I am looking at buying the FTSE in something other than pounds. . .

    Have a great day

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    Quote Originally Posted by voltage View Post
    Hi Beebop, you seem to have great knowledge on investment trusts. I own: BIOG.LSEBiotech Growth Trust, WWH.LSEWorldwide Health and Templeton Emerging. I have been quite disappointed the returns with these specific trusts and wonder if it is more prudent to have a couple of global investment trusts. Any recommendations? I do own Scottish Mortgage. What sites do you use for info on ITs?
    Spotted this today FYI: from citywire: “Biotech Growth (BIOG) has slipped to its widest discount in three years as shares in the underperforming investment trust fail to respond to a recent upturn in fortunes.The £335 million listed fund closed at 752p yesterday at a 10% discount below its estimated net asset value (NAV) of per share of 838.4p on Friday, according to Numis Securities.
    In a note to investors this morning, Richard Harris of broker Cantor, highlighted the discount which he said was the result of ‘a rebound in NAV [net asset value] since early October’.
    The discount is wider than the 7.4% average discount at which the trust has traded in the past 12 months. It gives BIOG a ‘Z-score’ of -2.3 which, if sustained, will likely put it in our ‘cheap’ list of this Friday’s Investment Trust Watch.”

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    Ha! Funny!

    Earlier this year I had some money (pounds) in a GBP-denominated, Irish-domiciled biotech ETF – BTEK iShares IV PLC NASDAQ US Biotech UCITS USD(GBP) Acc.

    It did OK, but I pulled it out to dabble in the GBP-denominated US bond funds. However I’ve been thinking about going back in – it’s started to show encouraging price movement over the past fortnight or so.

    Looking at BTEK and BIOG, 25% of each fund is made up of these four -

    Amgen Inc
    Gilead Sciences Inc
    Vertex Pharmaceuticals Inc
    Alexion Pharmaceuticals Inc

    Which, I guess, just goes to show how small the investable universe actually is, once you start focussing on specific sectors.

    And out of idle curiosity, I wonder how you go about working out the discount/premium to NAV for an ETF – or if that’s even possible

  12. #102
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    GTM...It probably is not possible to work out an ETF discount as it is a tracker of the collection of asset’s NAV, whereas a trust is a unit in a collection of assets. The reasons I like the ITs is because of this window of discount/premium opportunity plus the “theory” that someone/some group is piecing together an intelligent collection of assets. Whereas the ETF scene is more subject to the vagaries of market mood.....that said, both lots are relatively volatile at times especially when the media wants to swing the reading public into a new mood.

    And yes, many of the funds are made up of the same components. For the medical arena, I selected BBH.L as it had a different mix and a consistent dividend, although, I did buy Gilead twice on its cycles (nice small gain both times).

    I have just taken a look at my UK portofolio and the universe has started changing. My fantastic Monks, remains fantastic, however, the languid BlackRock Throgmorton (small caps) has been on a rocket base in recent weeks.....it now threatens Monks for dominant position in the folio. I never would have thought that.

    I think I should try and understand these bond funds more. Please keep posting about your moves on them as it is good to learn something new.

  13. #103
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    Default Those Bond Funds

    Like you, BeeBop, I have a use (a need even) for pounds for use in the UK .

    So, having decided that I’m going to have pounds, the question becomes where do I hold those pounds as they accumulate.

    Cash? It pays nothing. But at least there’s no exchange rate risk.
    Shares? That’s another post.
    Bonds? Useful for diversification. I’ll put my hand up and plead guilty to a fondness for diversification across asset classes.

    But there’s “quality” to consider. Having seen my mother become increasingly exposed to Hanover Finance in the early 2000s, I rate “quality” as important, and am prepared to balance interest rate against credit rating. I think of it as insurance, and am prepared to pay the premium.

    Plus, at times of share market volatility, there’s a flight from shares to bonds at the asset class level, and a flight from junk to government within the asset class.

    I remember in the GFC when bonds from Infratil, Hellaby, Silver Fern Farms, and others could be picked up at yields well into double figures, while NZ Government Stock went in the other direction. Government-guaranteed South Canterbury Finance bonds at a 25% yield? Oooooooh! Yes please!

    But back to the point - whose bonds?

    Well, if you’re looking for quality, you can’t go past government, can you? Given the world’s desperate search for yield, coupled with existing government bond interest rates globally (minimal to negative – I mean Argentina being able to sell a 100-year bond - come on!), and the likely trend, this points toward the US government, where the Fed has been raising interest rates, while at the same time the President is looking to lower interest rates. Who will win? And what will it mean for the yield curve? So I buy much but not all of the yield curve, settling on three timeframes

    So for bonds, I settled on 3 timeframes:

    30-90 days
    3-7 years
    20+ years

    The various forms of tax floating around mean steering clear of the US and the UK, and the fact that I’m buying in pounds means that a US or UK domiciled fund is off the table, except for the 30-90 day US Treasury Bills, which aren’t available outside the US and the USD. Why not break the rules at the beginning, eh?

    So knowing whose bonds, and knowing the duration, the currency, and the domicile, it’s simply a matter of trawling Morningstar to find the right vehicle .

    iShares run appropriate ETFs out of Ireland, denominated in pounds, which suit me fine, but here are other domiciles.

    The exchange rate is important

    I know the average value of my pounds in USD, and it’s relatively easy to construct a matrix of fund price and exchange rate which you can plug into a spreadsheet to tell you the effect of the combination of exchange rate movements and fund prices, which gives you entry, accumulate, decumulate, and exit points. After all, if the GBP/USD goes from (say) 1.21 to 1.29, your fund is worth a whole lot fewer pounds!


    GBP/USD rises, Fund price rises
    GBP/USD rises, Fund price falls
    GBP/USD falls, Fund price rises
    GBP/USD falls, Fund price falls

    So to summarize – pick your asset class, pick your duration, pick your vehicle, and work out what the effect of currency movements will be, and do daily data entry.

    And never forget that timing and exchange rate are incredibly important
    Last edited by GTM 3442; 23-11-2019 at 06:20 PM.

  14. #104
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    Thanks give us a heads when the timing and exchange rate are right.

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    Valuing an ETF

    I suppose it's possible,but its likely to be extremely inaccurate. The fund manager of an IT knows the portfolio composition on a daily basis, and can mark to market on that basis.

    With an ETF, you as a retail punter generally only know what the actual portfolio composition was as at the end of the last reporting period. So whilst you can mark to market, you're probably doing so based on old, out-dated, information, and assuming that the ETF is a 100% fit to any underlying index.

    So I guess that yes you can, but why would you?

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