Hardboy
27 Apr 2018
Re: Stymied Ben, "I don't see the need for using an IT to invest .......in just one gilt is pointless" I think you missed the point. I want an IT which invests in bonds issued by Governments. Not just one country's bonds, and certainly not just one bond - that would be pointless as you say. A manager who can weigh up economies, exchange rates, and risks, to take advantage of countries with higher yielding bonds as well as underpinning it with more secure nations' bonds."There is no risk of default by the Government" - Wow, have you never heard of Greece & Iceland or Venezuela - and even the US & UK have been perilously close to having to default in recent years.
marktime1231
27 Apr 2018
Re: Stymied I knew I should have just said "sorry don't know".Have a look in FETrustNet screened for IT and Fixed Interest, it shows up IPE as per the good suggestion. Probably worth trawling through Mixed Assets too. A low Risk Score steers you to low volatility options.[link] .... see posts on "Danger" below. We have been reminded recently that fixed interest trusts, even those based on no-risk bonds, are not immune to market volatility when the possibility of increasing interest rates pushes up bond yields and as a consequence your capital value can slump sharply on sentiment. NCYF slid from 62.x to 57.x as you can see, all because of the heightened expectation of a series of interest rate rises in the US.The only way to beat that is to buy direct at face value ... but I still don't know how you can buy gilts direct as a private investor, other than the retail offerings via NS&I. Maybe that is an option, granny bonds.[link] a 1.9% 3-year income bond or 1.95% 3-year growth bond, taxable, investment limit £1M, and hope that another issue comes along which you can roll over into.Safe as the houses of parliament. Does not even beat inflation.
budu
27 Apr 2018
Re: Stymied I, too, would like to find a trust specialising in government bonds. The nearest I have found so far is Invesco Perpetual Enhanced Income Trust (IPE). This invests "globally" in government and corporate bonds but reserves the right to add equities if it wishes. Objections to the mixture and the premium of 3.78 might be overcome by the yield of 8.13%...
Ben Alligin
27 Apr 2018
Re: Stymied I don't see the need for using an IT to invest in gilts. There is no risk of default by the Government, so using an IT to spread the risk of investing in just one gilt is pointless, and the manager is taking a fee. I have a significant investment in just one (index-linked) gilt, but with the yields so low these days, I'm not inclined to make further investments in gilts just now.
Hardboy
27 Apr 2018
Re: Stymied Mark, I really appreciate the time you took for the detailed reply. I understand shares; and keeping on top of what is happening with the equity market keeps me more than busy enough. I don't really want to try to get the same level of understanding of bond markets as there wouldn't be enough time in the day. That's why I look for ITs to invest in those markets - using a fund manager who has a full time job understanding those markets. Because of my better understanding of shares I have always been overweight in equities when looking at my overall portfolio; and as I think markets are beginning to become more volatile think it's time to get more exposure to bonds. I have sufficient exposure to corporate bonds, and was looking for an IT which specialised in Govt Bonds for more balance.
marktime1231
26 Apr 2018
Re: Stymied Govt bonds / gilts are not my cup of tea due to their generally very low yields, they might get more attention when inflation returns or if I reach a stage with my investments where preservation rather than income becomes a priority ... stranger things have happened, England might win the World Cup, my prostate might suddenly start firing again ...There are some US based ITs which have spectacular yields by mixing risky debt and CLOs together with govt bonds, but they are not available direct to UK retail investors I don't think. Can you self-invest directly in govt bonds, other than the retail offerings I mean ... the logic of that sentence says the answer is no. Surely there is a basket of fixed vs variable vs index-linked to choose from ... funds rather than trusts maybe.Last year when there was a growing sentiment towards taking cover I examined the choices for so called defensive trusts designed to preserve capital. I suspect these are heavily into UK and US govt bonds. The clear winner has been RCP the Rothschild IT (see also Ruffer, Personal Assets) ... but it yields and grows very little, was trading on quite a premium, and still struggled to a lesser degree when global markets stuttered. My conclusion is to turn to cash and gold if you are really worried, otherwise tough it out with a portfolio of top rated growth/income trusts which will come back stronger in the long term.I imagine the low risk end of lifestyle funds eg Vanguard are loaded up on govt debt, they are not ITs but they are cheap except if you hold them in a platform like HL which promotes and then creams off a monthly holding charge.Pref is the whizz at fixed interest and will no doubt have better suggestions.II have lost their crown as the low cost people's platform you could rely on. They don't seem to know what they are doing on several fronts, and they do not care either. I am hoping AJ Bell will be better, as an alterative to HL where you pay fully for what you get.
Hardboy
26 Apr 2018
Re: Stymied Mark, yes the NAV is almost unchanged while the sp has been inching up. Ex Div today and the drop is just about equal to value of the div. I'm sure this tells us something about Mr market's view on the future, but I'm not sure what. This invests mainly in corporate bonds. Do you know of an investment Trust which invests in Government Bonds (without restricting itself to any geographic area. I feel I need some exposure to Govt Bonds to balance my portfolio a bit, but have not found one yet. I thought it would be easy, but not so. As for ii's processes I discovered another problem this month. I decided to bed & ISA a couple of shares, so put the instruction through. First problem was they say it could take up to 10 days before it was executed, and I could find no record of mu instruction - it does not show as an open order. Then one day the trades happened. The shares were sold from my trading account and bought in my ISA; but of course the trade had not settled so no money had actually been transferred. I had money in my ISA Account and went to trade something and I was told my account was overdrawn; and I had to top it up. I realised what the problem was, so didn't top it up (otherwise I would have exceeded my ISA limit. To be fair to iii, when I pointed out the problem they said they were aware of it, and if I did want to trade I could do so over the phone - but nor=r good!
marktime1231
26 Apr 2018
Stymied I thought today might have been an opportunity to take a first stake in NCYF going ex-div, but the sp has not retreated much. In fact NAV has idled while the sp has motored on to a 6.5% premium. Still looks a fair bet on paper but I won't be investing just yet, not sure when the opportunity will come around again. Oh I wish I had gone ahead at 57.x in January.Might take another bite of SQN instead which is still enjoying a 3% discount.Not helped in my investment plans that II have failed to transfer the cash balance to my new AJBell account for yet another three weeks, without explanation. Apparently there are efficient switching rules for ISAs to ensure a fair market, but not SIPPs. II are taking "advantage" with a capital P.
FRTEB
21 Mar 2018
Re: Preference Shares " ...investments look to be well diversified " Exactly. That's the key point. There will always be one or two munters but as long as there is sufficient diversification it isn't a problem. With a yield of well over 7% there is a good margin of safety here and NCYF have a record of increasing dividends. It's a poor show when one gets stiffed due to holding the 'wrong' shares. There but for the grace of a fictional deity... etc. Somehow I doubt that Aviva's plan to cancel their prefs will become widespread. One or two might try the same trick but IMHO most companies would not risk the backlash, bad publicity and loss of confidence that comes with it. As I keep saying, good luck to all of us - we all need a bit of it in this game.
PrefInvestor1
21 Mar 2018
Preference Shares Hi All,I hold a few of these for the dividend. While not visible in their top 10 holdings I believe that this trust invests in preference shares. Given the Aviva initiated panic in this market a significant holding in prefs would be a cause for concern and some other income funds have taken a hit because of it. NCYF price seems to have been improving though which is an encouraging sign.Not planning to sell out here, investments look to be well diversified which is good. Just sounding a note of caution that’s all... planning no large holdings in anything in my new portfolio having sold my prefs.ATBPref (no longer)
fieldsman
16 Mar 2018
Re: Danger It is useful to look at the long-term chart.NCYF hit 37p in 2008!I bought NWBD @ 19% return at the time (why didn't I buy more? No one else was so I felt that I must be wrong).I am in agreement with soundmoney on this, though I am still a holder.I am also with everyone that there seems to be no safe havens.
marktime1231
19 Feb 2018
New Look snippet via the weekend papers"Alchemy Partners, whose previous investments have included the retirement homes builder McCarthy & Stone, is understood to be considering buying into New Look’s bonds, some of which were trading at less than 20p in the pound last week."I think this refers to previous issue unsecured bonds rather than the secured ones which NCYF hold, which have stabilised in the last week at around 46p. Good news though? The New Look store I saw on Saturday was still running its fire sale, up to 70% off. I still think New Look is just a small fragment of NCYF.Meanwhile NCYF's NAV is dragging along at 57p while the sp has regained some of its premium to 59.5p. Market appetite for corporate bonds yielding 6.5-11.88% remains irrationally depressed, and NCYF's newest and biggest stake in NRR has some recovering to do.Biding my time. Maybe missed the boat.
marktime1231
11 Feb 2018
Re: Danger That sounds absolutely right, it is hard to tell how much has already been priced in so the sp might continue lower yet if it behaves as you say it might in line with a bear market in bonds. As has been suggested that risk can be managed by investing in stages, adding if the sp tracks down. Or wait what could be a pretty long time for things to recover, and try not to lose patience hoping for it to turn up.The punishment is 7% income all the while, having to stare at a red line in the portfolio, and a degree of risk over the sustainability of the dividend. 6% would still be fine if payout had to be trimmed. The alternative is to sit out.
sound money
11 Feb 2018
Re: Danger Market time, "What is NCYF in danger of exactly ... a sudden slump more than 6% like one housewives' favourite trust managed on a single day last week"A slow erosion of its capital value. In fact it's already started, it was just over 62p a week ago.This applies to virtually to all bonds and bond funds. Even at the short end two years or less there has been erosion. This is normally where money flees in a downturn.I'm only holding PMO1 and Enquest retail bonds all below par.M
marktime1231
11 Feb 2018
Re: Danger Not that I know anything but I agree.I can't imagine a secure 7% savings rate in the next 3 years so why should NCYF continue to do more than drift with the expectation of a slow and steady return to 2..3...4% base rates. In that scenario the risk in NCYFs underlying positions should not be a general cause of concern? So, buying in at 57.5p and adding on the way down would mitigate the sp risk while the yield holds or gets even stronger. Now that the premium has mostly rubbed off. It was quite a strong premium over 6% until recently which I took to indicate the perceived strength of management, the quality of what is in NCYF's basket and its expected ability to produce income. Blimey, that sounds like an advert, don't mean it to be, I am not even invested (yet).The anti-scenario is an economic or markets crash in a couple of days or years, in which case NCYF should return to favour as a safe haven? Or we are all doomed anyway.The random market behaviour and interest rate outlook don't make NCYF a dud, if you are content with 7% or more, and who isn't? 7.22% was about the highest retail savings rate I saw in the 2007-2009 boom bust when I was taking cover from markets, stake-building, pouring over DT's best buy page and tarting myself around the 2-4 year fixed rate deals on offer from regional buildings societies and challenger banks. I can totally understand markets getting hyper-excited because US 10 year bonds have staggered back towards 3%. Not! UK gilts up to 1.6%, not quite a 2 year high but rising. Looking forward, a UK government bond offering even 4% index linked for 10 years would not tempt me except in the corner of my income portfolio. CTY is one of my smaller holdings and already does that. 5% or more would get my attention ... or remember those 5 year NS&I IndexLink Certificates which always sold out on day one ... and 6% would be an all-in. So now the unsettled market is pricing in extreme fears of what might lie several years ahead when we don't really know what will happen next week.The best UK NS&I bond today is 2.2% fixed for 3 years. Except they are taxable, you can't wrap them in ISA or SIPP. Pants. Sorry I meant safe. Less than inflation. Much less than the rate of increase in Council Tax, household energy ... So, in the meantime parts of my portfolio will need to hunt for decent yield in safe-ish places.I am listening though, you have got attention. Recent behaviour shows how volatile even the most defensive types of holding can be. The only ones holding up across my entire portfolio have been SMIF and some direct retail 6-6.5% bonds, but even they have retreated a smidge. Very very frightening. And to my pig-headed way of thinking, irrational. The opposite should be happening while markets are in a flap.What is NCYF in danger of exactly ... a sudden slump more than 6% like one housewives' favourite trust managed on a single day last week?Got to put the money somewhere as you say.I am tracking but what underpins NRR looks less secure to me and for a slightly lower yield which may not last, just sold RDI for that reason. I already have enough exposure to LGEN and other so called blue chip so called defensive so called high yielders. LGEN is a month away from publishing results of what the CEO has touted as a year of the most tremendous momentum, but the sp was 10% off last week even with the prospect of 6% yield. Any other suggestions ... BP, SSE, NG, LLOY, GSK, MKS, SBRY, UU, BIFF etc all suffering hard. How bad could it get for NCYF to be worse?Or, they are all bargains and a strong buy, fishing with grenades.
