Corporate bonds for Retail

[MrGecko]

Is it possible for guys like me to get their hands on corporate paper and hold until maturity?

Most other asset classes (equities, commodities and FX) I think I can replicate pretty well with ETF's, but with the bond ETF's I am putting my principal at (greater) risk, am I not?

If I find a 5yr bond, provided the company doesn't go bust, obviously, I get my principal back. If I do it via an ETF, come 5yrs (when I need the cash), my principal will be reflected in the spot value of the ETF - which tracks an index - which could be lower that I bought it at.

Have I understood this correctly?

 

[arabianights]

some corporate paper is issued in pretty small size, you could buy that pretty easy I think... alternatively how choosy do you wanna be... it's CP ffs...? investing in a unit trust or similar you're not exposed to the manager?

 

[MrGecko]

some corporate paper is issued in pretty small size, you could buy that pretty easy I think... alternatively how choosy do you wanna be... it's CP ffs...? investing in a unit trust or similar you're not exposed to the manager?

I don't mind him managing his box if he's got a remit I'm happy with (and as long as he sticks to it, of course).

As for choosy... well, I'll do my due diligence of course - in an ideal world I would spread it in 2D over grade / duration in sector's that I don't think will blow up in my face. I mean, what is the duration of an ETF?

p.s. define small size...

 

[arabianights]

Voila: http://www.guardian.co.uk/money/2010/feb/06/tesco-bonds-retail-investors

Personally I dunno why you would want to hold corporate bonds, but if you insist.

 

[MrGecko]

Thanks for that... although I had hoped there would be more variety than that.

As for why, all part of asset allocation old bean. If I'm gonna p!ss off for a few years, I am gonna have to put the money somewhere, neh? Rather not stick it all in a tracker fund, if I am honest.

 

[aspex]

Try bank paper.
http://sites.google.com/site/fixedintereststocksresource/

 

[Rhody Trader]

Is it possible for guys like me to get their hands on corporate paper and hold until maturity?

I can't speak to the specifics of other markets, but in the US a great many corporate issues are exchange listed and thus pretty readily tradable. They are generally listed with a $1000 notional value, so pretty easy for the small investor to handle.

 

[scose-no-doubt]

http://fixedincomeinvestor.selftrade.co.uk/x/mem_selftrade/bondtable.html?groupid=4

 

[SanMiguel]

Personally I dunno why you would want to hold corporate bonds, but if you insist.

Too much risk you think?

 

[MrGecko]

I can't speak to the specifics of other markets, but in the US a great many corporate issues are exchange listed and thus pretty readily tradable. They are generally listed with a $1000 notional value, so pretty easy for the small investor to handle.

thats what I thought

 

[MrGecko]

FYI

http://www.londonstockexchange.com/exchange/prices-and-markets/retail-bonds/corporate-search.html

 

[scose-no-doubt]

So when you going then?

 

[MrGecko]

So when you going then?

beginning next yr at the earliest - definately going, although not the original plan.

 

[arabianights]

Too much risk you think?

No such thing as too much risk... just that the reward is pathetic.... there no reason a diversified portfolio would need every asset... basically bonds r for benders...

gecko can PM me about my iraqi stock market punt if he wants

(I'll let him know what we've bought after we've bought it )

((Iraqi thing rocks. We even need to register at iraqi embasssy we're so pioneering....))

 

[MrGecko]

No such thing as too much risk... just that the reward is pathetic.... there no reason a diversified portfolio would need every asset... basically bonds r for benders...

gecko can PM me about my iraqi stock market punt if he wants

(I'll let him know what we've bought after we've bought it )

((Iraqi thing rocks. We even need to register at iraqi embasssy we're so pioneering....))

Well other than dividends, what other sources of income can I get my hands on?

 

[SanMiguel]

Well other than dividends, what other sources of income can I get my hands on?

Buy a couple bags of gold and some junk silver
Are you just after income or are you after capital increases as well?
If just income, the Motley Fool have some discussion about a high yield portfolio for income only but that's a whole separate matter.

 

[MrGecko]

Buy a couple bags of gold and some junk silver
Are you just after income or are you after capital increases as well?
If just income, the Motley Fool have some discussion about a high yield portfolio for income only but that's a whole separate matter.

See-ing as I haven't got a scooby-doo on where we will be from 6m+ until.. well whenever, I don't want to expose myself to much directional risk. But I have to put it somewhere, and all in the bank paying (fück all)^1/2 doesn't blow my skirt up. I want to explore the options.

Also bear in mind that I don't want to have to manage it much, either.

 

[arabianights]

still confused why you need corpy bonds... you I assume understand they can be replicated with govvies and stocks... so why complicate things....

 

[MrGecko]

you I assume understand they can be replicated with govvies and stocks...

in terms of replicating the payout? no, this is news to me... on reflection I think I can see the "why's", but unfamiliar with the "hows". I've got that f*ckin fabozzi book somewhere...

 

[scose-no-doubt]

Where's the first stop Gecko? I'm gonna be in the Alps early March if you're in France


interesting

http://www.quoniam.de/fileadmin/images-content/Research/BEA_insight4Q09.pdf

Aren't you open to vol on the stock portion of portfolio with this type of strat though? I'd have thought capital loss on equity would be more likely than a restructure of corp short term bonds. :S

If this is a straight divi yield +(capital app/depreciation) vs coupon, I'm a sh1tbag, I'd take the bond