jaswells
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Post by jaswells on Jun 5, 2018 11:40:23 GMT
A big lump of this bond just been put on the platform (200k).
Herein lies the reason I find wisealpha an attractive service with a clear gap in the market. Without Wisealpha I have access to the retail bond market at LSE (ORB Market). Typically rates are quite low for the banks and Barclays Sept 2026 will presently yield 3.58%. However, by getting access to corporate bonds traditionally reserved for institutional investors I can now happily achieve a much higher yield, even for smaller investment sums.
Barclays survived the biggest financial crisis in a generation, may not be in rude health but likely a survivor.
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macq
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Post by macq on Jun 5, 2018 11:53:53 GMT
have had a dabble with WiseAlpha but perpetual bonds are a different thing to the corporate notes they offer with different rules so need to be looked at in that respect
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dandy
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Post by dandy on Jun 5, 2018 12:00:46 GMT
A big lump of this bond just been put on the platform (200k). Herein lies the reason I find wisealpha an attractive service with a clear gap in the market. Without Wisealpha I have access to the retail bond market at LSE (ORB Market). Typically rates are quite low for the banks and Barclays Sept 2026 will presently yield 3.58%. However, by getting access to corporate bonds traditionally reserved for institutional investors I can now happily achieve a much higher yield, even for smaller investment sums. Barclays survived the biggest financial crisis in a generation, may not be in rude health but likely a survivor. It is easy to see Barclays and assume safe as houses. The devil, as always, will be in the detail. Barclays have unlimited access to money at close to 0% if they are guaranteeing it. These will therefore come with no such guarantee. So, yes Barclays will survive but that doesn't mean your investment will ...
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locutus
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Post by locutus on Jun 5, 2018 12:07:43 GMT
Why is it called a perpetual if it has an actual end date?
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Post by charlata on Jun 5, 2018 12:21:14 GMT
I'm well outside my area of expertise here, but are you sure you are comparing like with like? Isn't the 3.58% yielder a more senior loan note than the one on Wisealpha? I.e. if Barclays were to fold, the former would be redeemed in full before the latter saw anything.
I do have a bit with Wisealpha, but can't help thinking that I could probably invest in an ETF which would give me the same exposure for considerably less than 1%/yr in fees. For instance Ishares seem to charge 0.2% on corporate bond ETF's. Maybe I could ask one of our resident quants for some free advice samford71 yangmills
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jaswells
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Post by jaswells on Jun 5, 2018 12:40:22 GMT
Good point, very hard to know where these would rank alongside other debts. I know some bonds on the LSE market are secured against company assets, but not all. I also hold a number of bond funds including LSE: NCYF which I know holds a number of similar bonds to Wisealpha inc. Garfunkelux and Barclays perpetual. Healthy yield about 7% I believe.
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macq
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Post by macq on Jun 5, 2018 13:13:14 GMT
Somebody may have more idea but my understanding of say the Barclays bond(not checked the others) is that it has a date of 2024 and then every 5 years after hence the perpetual in the name as there is no guarantee on the date.They are also unsecured and i believe would be more treated like equity then a secured bond
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jlend
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Post by jlend on Jun 5, 2018 15:47:49 GMT
As per the info from wisealpha
The bond is a perpetual bond (i.e. with no firm maturity date) although the expected maturity is September 2024.
The bond is subordinated to senior debt and has a risk profile closer to that of the listed shares
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rick24
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Post by rick24 on Jun 5, 2018 16:04:41 GMT
The seniority (or rather lack of it) of the bond is explained in the prospectus. It is very low ranking - on a par with preference shares - and it can be converted into shares at a fixed price of £1.65 if the bank is in trouble (compare the current share price and think what it would be if the bank were in trouble). Plus they can elect to cancel the interest if they don't have enough money to pay this and other more senior creditors. Can be redeemed at par if it no longer qualifies as Tier 1 capital (....remember the Aviva kerfuffle recently?). I'm having a tiny punt as part of a diversified portfolio.
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puddleduck
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Post by puddleduck on Jun 5, 2018 18:21:58 GMT
I was a very early Wisealpha investor and I'm afraid was rather spoiled by the 8% 1 year WiseAlpha bonds they launched around 18 months ago - I wished I'd put in a lot more than I did in hindsight.
I'm not quite so keen on these bank bond offerings - maybe I don't understand it, but I thought banks still had access to the Magic Money tree almost free money from the BOE? So why these bonds? They seem to have a higher risk profile than most of the non-bank bond offerings we see here.
I'm really no bond expert, and well out of my comfort zone, but none of these are really grabbing me.
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rick24
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Post by rick24 on Jun 5, 2018 18:55:52 GMT
I was a very early Wisealpha investor and I'm afraid was rather spoiled by the 8% 1 year WiseAlpha bonds they launched around 18 months ago - I wished I'd put in a lot more than I did in hindsight. I'm not quite so keen on these bank bond offerings - maybe I don't understand it, but I thought banks still had access to the Magic Money tree almost free money from the BOE? So why these bonds? They seem to have a higher risk profile than most of the non-bank bond offerings we see here. I'm really no bond expert, and well out of my comfort zone, but none of these are really grabbing me. For one thing, the banks are using them to satisfy their additional Tier-1 capital requirements and as a kind of buffer when things go wrong - a bit different from funding for lending.
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Post by kazamx on Jun 5, 2018 19:27:54 GMT
I'm really no bond expert, and well out of my comfort zone, but none of these are really grabbing me. I took a small piece. I own about half of the bonds on wisealpha at the moment. Just a small amount of each and the total is less than 5% of my investments. I just find it more interesting than an ETF. I have been bitten by the New Look and Shop Direct lock downs though. On the other hand I did well out of Matalan and Tesco
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Post by samford71 on Jun 6, 2018 19:42:49 GMT
I'm well outside my area of expertise here, but are you sure you are comparing like with like? Isn't the 3.58% yielder a more senior loan note than the one on Wisealpha? I.e. if Barclays were to fold, the former would be redeemed in full before the latter saw anything.
I do have a bit with Wisealpha, but can't help thinking that I could probably invest in an ETF which would give me the same exposure for considerably less than 1%/yr in fees. For instance Ishares seem to charge 0.2% on corporate bond ETF's. Maybe I could ask one of our resident quants for some free advice samford71 yangmills In the US, you could simply buy the HYG ETF (IShares Iboxx HY bond index tracker) at a fee of 0.49%. This is one of a few large ETF trackers that focusses 100% on high yield (HY) speculative/junk grade corporate bonds. Alternatively, you have a plethora of actively managed HY bond funds plus secured loan funds, ABS etc. The US fixed income credit markets are deep, well developed and you can get pretty much anything you wish for (even if you shouldn't be wishing for it). Unfortunately, the UK is not as well served as the US when it comes to obtaining a quick and easy exposure to HY bonds. We've tended instead to prefer high yield equities, mixed corporate bond funds (i.e investment grade mixed with spec grade) or other high yield income funds that focus on other types of assets, often property based. I did a little summary of those on this post link. This does include a few HY bond funds but check the details for what they really contain. As for WiseAlpha, I struggle to see the attraction. The idea of being able to manifest an investment strategy that takes exposure to a portfolio of spec grade corporates is a good one, since it is an underserved part of the market. However, I see no value in the WA manifestation of this strategy. As far as I can see I'm paying 100bp to take additional counterparty risk to WA, over and above the credit risk of the underlying borrowers. That makes no sense.
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macq
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Post by macq on Jun 6, 2018 21:23:25 GMT
would throw Royal London Sterling Extra Yield or GAM Star Credit into the debate on funds.With regards the merits of WiseAlpha you could probably say the same with the likes of PM or PP in the property rental p2p field verses a property IT/REIT but guess both products can be marketed in an easier to understand way by just pretty much quoting an interest rate rather then yield/growth/gearing etc as per a normal investment fund
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puddleduck
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Post by puddleduck on Jun 7, 2018 9:47:49 GMT
would throw Royal London Sterling Extra Yield or GAM Star Credit into the debate on funds.With regards the merits of WiseAlpha you could probably say the same with the likes of PM or PP in the property rental p2p field verses a property IT/REIT but guess both products can be marketed in an easier to understand way by just pretty much quoting an interest rate rather then yield/growth/gearing etc as per a normal investment fund I had a quick look at those via my H-L account and GAM Star Credit looks fairly pricey to me at 1.18% vs the distribution, I quite like the look of the Royal London one though.
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