Bond (and equity) bonfire

[Gan020]

Over the last 2 days I've spent nearly all my spare cash on bonds and bond funds reasoning whether this is the bottom or not I'm getting a return I find acceptable.

Is it the bottom? Well for bonds I think we are in the right area. For equities I don't know but that's not what the bonds and gilts area is for anyway.

I'm not sure what to think really but for the first time in the last 5 years it feels like we have finally left the TINA (there is no alternative) environment and I had to choose which bonds or bond funds I liked most. Finally I have a spread of risk and maturity which is close to something I'm comfortable with.

I still haven't bought any prefs. The dated bonds looked much better value to me

[88V8]

Over the last 2 days I've spent nearly all my spare cash on bonds and bond funds reasoning whether this is the bottom or not I'm getting a return I find acceptable.

I'm trying not to buy Prefs as I think we are some way off the bottom, and unlike the summer bottom I think it will be the real bottom and not a trampoline.
But isn't it nice to have a sweetshop or at least a kiosk of c7% yields in Prefs.

Funds, I see NCYF where I'm heavy, is rising gently with an apparent big volume spike yesterday, BIPS where by pure luck I'm relatively light is nosediving, I think that contrast was discussed somewhere... duration, gearing.

Appreciating that your choices will be influenced by your existing holdings and balance consideration, which ones have you been buying?

V8

[Gan020]

Over the last 2 days I've spent nearly all my spare cash on bonds and bond funds reasoning whether this is the bottom or not I'm getting a return I find acceptable.

I'm trying not to buy Prefs as I think we are some way off the bottom, and unlike the summer bottom I think it will be the real bottom and not a trampoline.
But isn't it nice to have a sweetshop or at least a kiosk of c7% yields in Prefs.

Funds, I see NCYF where I'm heavy, is rising gently with an apparent big volume spike yesterday, BIPS where by pure luck I'm relatively light is nosediving, I think that contrast was discussed somewhere... duration, gearing.

Appreciating that your choices will be influenced by your existing holdings and balance consideration, which ones have you been buying?

V8

Out of the usual favourites I'd list the following. Plenty of BIPS below 144p ( think this is finally at or near the bottom) , some HDIV below 58p (how crazy is that), some Tesco 29's below 95p. One we do not talk about often some BT 28's below 95p.

I am particuarly delighted with the Tesco and BT. I have plenty or arguably too many bank and insurance CoCo's and these diversify me away from this concern.

[ResourceOgre]

Crazy days.

In my AJ Bell screen, NBS.L price is 113. No doubt due to housing jitters (well, more than jitters, market is rightfully very concerned).

Unbelieveable, was 194 within the last year. Nom Yield is 10.25 so that makes it 9.07% yield.

Not a usual bond or pref, but still.

UK markets in a tailspin. Nice one Kwasi

[NotSure]

Only thing green today is bond yields..

[Wozzitworthit]

Some of the usual suspects look reasonable, however, I am fairly loaded up with most of these anyway -

Co-op 42TE - a YTM of around 8%

Burford - BUR2 2024 - around 8.5% and BUR3 - 2026 about 9%

On the perpetual front - (excluding Prefs) Nottingham BS - NOTP comes in at 7.4%

Like others, I still think/hope that perpetuals , including prefs will drop to give higher yields - around 8% is my pencilled in target, but we'll see. Happier with dated stuff at present, if I can find things I haven't got !

As regards Funds/ITs - have got enough AXI, NBMI and HONY,

Have smaller holdings in TFIF, SMIF, NCYF and BIPS and am thinking of getting a few more, but when ..?

Recently ventured into VSL and EJFI - temped to get more VSL

Running out of spare ISA cash as well - quite a few divs/interest due in December this year, but that about 2 general elections away on today's timescale

Nothing much to sell either!



Any comments/remarks on any of the above would be appreciated

[88V8]

As regards Funds/ITs - have got enough AXI, NBMI and HONY,

Have smaller holdings in TFIF, SMIF, NCYF and BIPS and am thinking of getting a few more, but when ..?

Recently ventured into VSL and EJFI - temped to get more VSL

Any comments/remarks on any of the above would be appreciated

HONY looks a bit of a punt; 69% gearing, 21% discount, 10% yield, their largest holding is that brain-dead outfit Sancus Lending LEND.
NBMI is small but then so is AXI. Yield 7.4% and no gearing. However, uncovered divi?
TFIF current yield 7.1% with no gearing, pretty large but not one I'd come across. Low cover.
SMIF Yield 8.6%. Good cover and no gearing.
VSL yield over 10%, no gearing, seems to have done well over 3 & 5 years. Cover is OK.
EJFI ords yield 9% with a stonking discount. ZDPs hmmm.

What bothers me about all these with the exception of NCYF and BIPS and for that matter SHRS although they are equity-heavy, is that they were founded since the GFC and so have not really been proven in the fire, as it were. Perhaps that's what's happening now.

SMIF, TFIF and VSL will be added to my target list, thankyou.
As with Prefs, the question is when.

V8

[Wozzitworthit]

88V8 - thanks for your comments/observations, always appreciated

Ref EJFI - I'm not sure that these are ZDPs.

They do have specific ZDPs as well as EJFI - maybe they are somehow linked ??

2022 ZDP Shares
Ticker: EJFZ
Shares: 5m, Maturity: 11/2022

2025 ZDP Shares
Ticker: EJF0
Shares: 17m, Maturity: 6/2025

See also

https://www.ejfi.com/media/1610/ejf-inv ... 022-vf.pdf


HONY - I don't have quite as many of these as AXI or NBMI - I stopped buying anymore when Questor recommended them !

Woz

[Laughton]

Picked up some 66WS (Prov. Financial 5.125% bonds) in my HL account, maturing October 9 2023 @ 95.48p including costs.

I day after ex div so only 2 coupons to come but bonus, for me, is that it salts some money away for a year by which time I hope things will have become a bit clearer re direction of interest rates generally and with a YTM of 9.96% and IRR of 10.14%, what's not to like.

[y0rkiebar]

Picked up some 66WS (Prov. Financial 5.125% bonds) in my HL account, maturing October 9 2023 @ 95.48p including costs.

I day after ex div so only 2 coupons to come but bonus, for me, is that it salts some money away for a year by which time I hope things will have become a bit clearer re direction of interest rates generally and with a YTM of 9.96% and IRR of 10.14%, what's not to like.

My interest was piqued by your post and it does look like a good, short term deal. However, Provident Financial don't look the most healthy of outfits, there is always the risk of the company going into administration!

[richfool]

As regards Funds/ITs - have got enough AXI, NBMI and HONY,

Have smaller holdings in TFIF, SMIF, NCYF and BIPS and am thinking of getting a few more, but when ..?

Recently ventured into VSL and EJFI - temped to get more VSL

Any comments/remarks on any of the above would be appreciated

HONY looks a bit of a punt; 69% gearing, 21% discount, 10% yield, their largest holding is that brain-dead outfit Sancus Lending LEND.
NBMI is small but then so is AXI. Yield 7.4% and no gearing. However, uncovered divi?
TFIF current yield 7.1% with no gearing, pretty large but not one I'd come across. Low cover.
SMIF Yield 8.6%. Good cover and no gearing.
VSL yield over 10%, no gearing, seems to have done well over 3 & 5 years. Cover is OK.
EJFI ords yield 9% with a stonking discount. ZDPs hmmm.

What bothers me about all these with the exception of NCYF and BIPS and for that matter SHRS although they are equity-heavy, is that they were founded since the GFC and so have not really been proven in the fire, as it were. Perhaps that's what's happening now.

SMIF, TFIF and VSL will be added to my target list, thankyou.
As with Prefs, the question is when.

V8

Is now a suitable time to add SMIF and NCYF to an income focussed portfolio of IT's, or should one wait for the inevitable BOE interest rate hike in November? Both currently yielding in the low 9's%

I hold no fixed interest otherwise, apart from what's within the likes of MYI.

[88V8]

As regards Funds/ITs - have got enough AXI, NBMI and HONY,

Have smaller holdings in TFIF, SMIF, NCYF and BIPS and am thinking of getting a few more, but when ..?

Recently ventured into VSL and EJFI - temped to get more VSL

Any comments/remarks on any of the above would be appreciated

HONY looks a bit of a punt; 69% gearing, 21% discount, 10% yield, their largest holding is that brain-dead outfit Sancus Lending LEND.
NBMI is small but then so is AXI. Yield 7.4% and no gearing. However, uncovered divi?
TFIF current yield 7.1% with no gearing, pretty large but not one I'd come across. Low cover.
SMIF Yield 8.6%. Good cover and no gearing.
VSL yield over 10%, no gearing, seems to have done well over 3 & 5 years. Cover is OK.
EJFI ords yield 9% with a stonking discount. ZDPs hmmm.

What bothers me about all these with the exception of NCYF and BIPS and for that matter SHRS although they are equity-heavy, is that they were founded since the GFC and so have not really been proven in the fire, as it were. Perhaps that's what's happening now.

SMIF, TFIF and VSL will be added to my target list, thankyou.
As with Prefs, the question is when.

Is now a suitable time to add SMIF and NCYF to an income focussed portfolio of IT's, or should one wait for the inevitable BOE interest rate hike in November? Both currently yielding in the low 9's%
I hold no fixed interest otherwise, apart from what's within the likes of MYI.

SPs at or near the bottom, I'd say.

If the Fed's next raise is 100bps then I'd expect SPs to tick lower. That's in three weeks, 3rd November.
BOE would surely have to respond with 100bps.
If the Fed only goes 75bps I think that's already priced in.

Either way, your timing wouldn't be far out if you buy now. Perhaps another % of yield vs time out of the market.
We just missed an ex-date for SMIF, but it's quarterly so no big deal.

I'm pencilling in 8% yield for my target Prefs and I shall try to hold fire until after 3rd November. I have this cunning tactic of not looking at my account during the week, so far it's working.

V8

[richfool]

As regards Funds/ITs - have got enough AXI, NBMI and HONY,

Have smaller holdings in TFIF, SMIF, NCYF and BIPS and am thinking of getting a few more, but when ..?

Recently ventured into VSL and EJFI - temped to get more VSL

Any comments/remarks on any of the above would be appreciated

HONY looks a bit of a punt; 69% gearing, 21% discount, 10% yield, their largest holding is that brain-dead outfit Sancus Lending LEND.
NBMI is small but then so is AXI. Yield 7.4% and no gearing. However, uncovered divi?
TFIF current yield 7.1% with no gearing, pretty large but not one I'd come across. Low cover.
SMIF Yield 8.6%. Good cover and no gearing.
VSL yield over 10%, no gearing, seems to have done well over 3 & 5 years. Cover is OK.
EJFI ords yield 9% with a stonking discount. ZDPs hmmm.

What bothers me about all these with the exception of NCYF and BIPS and for that matter SHRS although they are equity-heavy, is that they were founded since the GFC and so have not really been proven in the fire, as it were. Perhaps that's what's happening now.

SMIF, TFIF and VSL will be added to my target list, thankyou.
As with Prefs, the question is when.

Is now a suitable time to add SMIF and NCYF to an income focussed portfolio of IT's, or should one wait for the inevitable BOE interest rate hike in November? Both currently yielding in the low 9's%
I hold no fixed interest otherwise, apart from what's within the likes of MYI.

SPs at or near the bottom, I'd say.

If the Fed's next raise is 100bps then I'd expect SPs to tick lower. That's in three weeks, 3rd November.
BOE would surely have to respond with 100bps.
If the Fed only goes 75bps I think that's already priced in.

Either way, your timing wouldn't be far out if you buy now. Perhaps another % of yield vs time out of the market.
We just missed an ex-date for SMIF, but it's quarterly so no big deal.

I'm pencilling in 8% yield for my target Prefs and I shall try to hold fire until after 3rd November. I have this cunning tactic of not looking at my account during the week, so far it's working.

V8

Thanks 88V8.

What if you think there will be at least another rate rise after the early November one? Would you wait for the November one and then hedge your bets by buying then, or wait beyond Nov?

In the meantime, I have to find what I can liquidate to reallocate!

[88V8]

What if you think there will be at least another rate rise after the early November one? Would you wait for the November one and then hedge your bets by buying then, or wait beyond Nov?

In the meantime, I have to find what I can liquidate to reallocate!

Another? Oh yes.
Trouble is, one has to guess when it becomes baked-in to the SP and the market starts looking through the rises. I hope we get a price plateau, or whatever the bottom equivalent is, so we don't have to try and guess whether a modest rise is the start of an uptrend.

As to fully committing one's cash, it could be another 6 months before the rate rises come to an end. 6 Months out of the market if one holds off, unless your cash is income invested elsewhere.

I expect to begin buying in early November, when the rate rises have had time to work through. Not all in, but some.

There must be thousands of us trying to time the market, gonna come unstuck I suspect.

V8

[Gan020]

There must be thousands of us trying to time the market, gonna come unstuck I suspect.

V8

I have committed all my cash now. I am comfortable that when buying bonds I was happy to take the YTM and hold to maturity or if buying bond funds that that income flow would outweigh the risk of capital losses.

Only time will tell if this was a good decision.

[88V8]

Four days can be a long time in the market.... I now expect the next BoE raise to be only 75bps which I believe is baked into prices, so istm that we are now bumping along the SP bottom and I have today begun topping up NWBD, ELLA, BWRA, and AV.A/B even though it wasn't on my shopping list as I don't believe Aviva will try to play silly baggers again.
Also some SMIF (Twenty Four Select), and VSL (VPC Specialty Lending) although the latter only in my ISA as the income is taxed as interest.
I would be buying NCYF if we weren't already fat.

I am looking slightly askance at my holdings of BIPS and SHRS, both of which are highly geared. Gearing, all very nice when interest rates were on the floor, not so happy now.

Regards equities, I need to have a heave-ho for CGT purposes which I miserably failed to do last year having left it all too late, so insofar as I plan to repurchase, I will be looking for somewhere to park the proceeds for 30+ days, something that's probably on the up, with a small spread. Might be DEC Diversified Energy depending where it is in its current price band at the time.

Other than that, no equity purchase targets at the mo. Indeed, I am likely to move some of my equity proceeds straight into FI given the recessionary fears and uncertain equity outlook.

V8

[bruncher]

I now expect the next BoE raise to be only 75bps which I believe is baked into prices

But could the bigger picture (the weakness of the UK economy) worsen? I'm just seeing on the BBC news that Moody's has downgraded the UK outlook from Stable to Negative. How will that affect things? Higher interest rates?

[BullDog]

I now expect the next BoE raise to be only 75bps which I believe is baked into prices

But could the bigger picture (the weakness of the UK economy) worsen? I'm just seeing on the BBC news that Moody's has downgraded the UK outlook from Stable to Negative. How will that affect things? Higher interest rates?

Who knows? My thinking is that whilst the current round of inflation might last longer than expected, once the inflation burns itself out it could decline very quickly. There's lots of deflationary stuff happening in the economy other than interest rates that are bearing down hard on the population's disposable income. I am minded to think peak interest rates might not be the 6%+ that is currently expected.

[hiriskpaul]

Four days can be a long time in the market.... I now expect the next BoE raise to be only 75bps which I believe is baked into prices, so istm that we are now bumping along the SP bottom and I have today begun topping up NWBD, ELLA, BWRA, and AV.A/B even though it wasn't on my shopping list as I don't believe Aviva will try to play silly baggers again.
Also some SMIF (Twenty Four Select), and VSL (VPC Specialty Lending) although the latter only in my ISA as the income is taxed as interest.
I would be buying NCYF if we weren't already fat.

I am looking slightly askance at my holdings of BIPS and SHRS, both of which are highly geared. Gearing, all very nice when interest rates were on the floor, not so happy now.

Regards equities, I need to have a heave-ho for CGT purposes which I miserably failed to do last year having left it all too late, so insofar as I plan to repurchase, I will be looking for somewhere to park the proceeds for 30+ days, something that's probably on the up, with a small spread. Might be DEC Diversified Energy depending where it is in its current price band at the time.

Other than that, no equity purchase targets at the mo. Indeed, I am likely to move some of my equity proceeds straight into FI given the recessionary fears and uncertain equity outlook.

V8

To use up your CGT allowance could you not swap with something In an ISA? eg if you have £40k of Shell/whatever you want to sell to bank the tax free gain and £40k of BP in an ISA, just sell the BP and buy Shell, sell the Shell and buy BP.

[88V8]

Regards equities, I need to have a heave-ho for CGT purposes

To use up your CGT allowance could you not swap with something In an ISA? eg if you have £40k of Shell/whatever you want to sell to bank the tax free gain and £40k of BP in an ISA, just sell the BP and buy Shell, sell the Shell and buy BP.

Good idea and I have done that in the past, but my ISA now holds mainly things that pay interest, which I try to minimise in my trading a/c, or things with a hefty spread.

I've also tried swapping with OH, but she has an unfortunate habit of trying to improve the shining hour by waiting until the price falls, which on the whole it doesn't.

Perhaps if I had another a/c under an alias...

V8