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Short Gilts Anyone?

Gilts, bonds, and interest-bearing shares
Surerera
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Short Gilts Anyone?

#52112

Postby Surerera » May 8th, 2017, 9:40 pm

Algebris head Serra says shorting gilts safest fixed income bet:

https://www.ft.com/content/666b8143-2d9 ... ca8a4ff1ff


Surerera

AleisterCrowley
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Re: Short Gilts Anyone?

#52119

Postby AleisterCrowley » May 8th, 2017, 10:33 pm

I did look at this years ago -there's a thread on TMF somewhere- but couldn't work out how to do it. There is a short gilt ETF (XUGS?) But from memory it wasn't suitable, or I couldn't understand it. Probably the latter

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Re: Short Gilts Anyone?

#52232

Postby moorfield » May 9th, 2017, 12:19 pm

Find a GBP interest rate market on IG Index and setup a rolling spread bet (I would use options rather than futures contracts).

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Re: Short Gilts Anyone?

#52275

Postby Lootman » May 9th, 2017, 2:56 pm

AleisterCrowley wrote:I did look at this years ago -there's a thread on TMF somewhere- but couldn't work out how to do it. There is a short gilt ETF (XUGS?) But from memory it wasn't suitable, or I couldn't understand it. Probably the latter

Short-dated gilts should be regarded as the safest investment there is (for a UK sterling-based investor) because gilts are direct obligations of the UK government and because the short-end of any fixed-interest yield curve is always the safest, since they will soon mature and have less time for mischief to happen. Correspondingly, short-dated gilts will typically have the lowest yield to maturity. In that sense, they are more a substitute for cash in the Bank or a money market fund.

Also note that short-dated gilts themselves have a different tax treatment from funds containing gilts. There is no capital gains tax on profits made from gilts held directly, nor any ability to take a tax loss on them. And a fund will behave differently since it is constantly reinvesting money from maturing issues whereas a short-dated gilt is typically held to maturity.

The ETF I have used is ERNS, which isn't just short-dated gilts but invests in a range of secure short-dated fixed-interest securities.

Such approaches are a useful alternative to keeping cash in a saving account, but are hardly an investment approach. More a cash management strategy.

AleisterCrowley
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Re: Short Gilts Anyone?

#52284

Postby AleisterCrowley » May 9th, 2017, 3:25 pm

Lootman wrote:
AleisterCrowley wrote:I did look at this years ago -there's a thread on TMF somewhere- but couldn't work out how to do it. There is a short gilt ETF (XUGS?) But from memory it wasn't suitable, or I couldn't understand it. Probably the latter

Short-dated gilts should be regarded as the safest investment there is (for a UK sterling-based investor) because gilts are direct obligations of the UK government and because the short-end of any fixed-interest yield curve is always the safest, since they will soon mature and have less time for mischief to happen. Correspondingly, short-dated gilts will typically have the lowest yield to maturity. In that sense, they are more a substitute for cash in the Bank or a money market fund.
...

The ETF I have used is ERNS, which isn't just short-dated gilts but invests in a range of secure short-dated fixed-interest securities.
.


Aha, but this is about shorting longer Gilts, not going long on Short Gilts. I think

AleisterCrowley
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Re: Short Gilts Anyone?

#52298

Postby AleisterCrowley » May 9th, 2017, 4:17 pm

Snorvey wrote:I did look at this years ago -there's a thread on TMF somewhere- but couldn't work out how to do it.

Maybe that's for the best eh AC?


I wouldn't have lost much... although my natural inertia has saved me on several occasions

AleisterCrowley
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Re: Short Gilts Anyone?

#52300

Postby AleisterCrowley » May 9th, 2017, 4:20 pm

AleisterCrowley wrote:
Snorvey wrote:I did look at this years ago -there's a thread on TMF somewhere- but couldn't work out how to do it.

Maybe that's for the best eh AC?


I wouldn't have lost much... although my natural inertia has saved me on several occasions


http://boards.fool.co.uk/short-gilts-12 ... e#12508607

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Re: Short Gilts Anyone?

#52346

Postby Lootman » May 9th, 2017, 6:59 pm

AleisterCrowley wrote:Aha, but this is about shorting longer Gilts, not going long on Short Gilts. I think

Ah, serves me right for commenting without reading the article.

I'm not fond of the idea of shorting gilts. Partly because gilts will do well in any market dislocation. And partly because its expensive to short anything that pays a dividend or coupon, because the short holder has to pay those to the other party.

Which isn't to say that I disbelieve that gilt yields will go up. It seems that they must do. Only that I have no idea about the timing and, for short selling, that matters as much as getting the direction right. It's just too expensive to stay short for years.

If I wanted to make a bet on gilt yields going up, I would buy put options, and define my risk.


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