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  1. #11
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    Quote Originally Posted by kiora View Post
    I'm new to bonds having focused on shares up to now. Looking at retirement in 10-15 years time and trying to work out how to invest in bonds. Seems much more complicated than shares!

    Anyway, am I correct in reading this quoted article that:

    "all you need to do is ... concentrate most of your bond portfolio in high quality bonds issued by SOE's, city councils and banks with the latter limited perhaps to a maximum of 30 per cent of your bond portfolio. You need to have some short, medium and long bonds. "

    So I just invest in bonds from reputable organisations and ladder them. Ignore everything else - don't worry about valuing the bond etc.

  2. #12
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    Yes I would keep it that simple. Buy a good bond collect the interest and hold it until maturity or sell it if it is no longer good. Not complicated.
    h2

  3. #13
    Legend peat's Avatar
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    one needs to distinguish true bonds, from the various Notes that have recently been issued from (mainly) the banks. These are a lot more complex due to various factors such as redemption, reset, extended duration, and subordination.
    Last edited by peat; 15-03-2017 at 11:13 AM.

  4. #14
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    Yes I like mine stirred not shaken.
    h2

  5. #15
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    Some of the Perpetuals listed out there present and opportunity to capture value if interest rates rise eg the IFT bonds linked to the one year swap rate + a margin of 1.5%pa.. looks like they're currently priced to pay around 5.5% If you think short term rates have bottomed out you could gain on any upside in the future..

    I mention this as anyone thinking of constructing a bond portfolio may want to balance out their fixed interest positions with something like these instruments...

    Any thoughts?

  6. #16
    Ignorant. Just ignorant.
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    Quote Originally Posted by huxley View Post
    Some of the Perpetuals listed out there present and opportunity to capture value if interest rates rise eg the IFT bonds linked to the one year swap rate + a margin of 1.5%pa.. looks like they're currently priced to pay around 5.5% If you think short term rates have bottomed out you could gain on any upside in the future..

    I mention this as anyone thinking of constructing a bond portfolio may want to balance out their fixed interest positions with something like these instruments...

    Any thoughts?
    That's pretty much how I use IFTHA. An inflation hedge. You buy 'em cheap, which gives an acceptable return, but if rates rise, the coupon rate rises too.

    The "buy 'em cheap" part is important. I'd hate to be one of the poor b*ggers who went into these at time of issue.

  7. #17
    Legend peat's Avatar
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    we're currently offering some long dated bonds at 5.7% but despite their maturity out in the 2040's they reset every 5 years at a margin above the 5Yr swap rate and the issuer offers a resale facility and IF they dont find a buyer for your bond at the reset date (or choose to redeem it themselves) then there is another margin applied to the yield

    I actually consider this as a pretty good option for gaining a higher yield - sure they are subordinated and unsecured - but the duration risk is for all practical purposes only for 5 years.
    For clarity, nothing I say is advice....

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