Blog article: The Superiority of Corporate Bonds

Hi macq, the price drops have a lot to do with the weaker bond market right now due to the Brexit uncertainty. Which also means it is a good time to buy over the holiday season as our honorable friends bicker and lock in a good rate. The companies which have had more financial performance weakness are the ones most affected as they are percieved to be riskier but its all risk/reward. Having said that lowell is still growing strongly even though the senior secureds are 12%. Just in the wrong sector - consumer debt. Translated, if P2P consumer debt was trading in a secondary market with price based decision makers it would likely trade at much higher yields. Note, its no coincidence goldmans is taking its foot off the gas in consumer lending via ita marcus lending unit.....And obviously in a hard brexit SME lending would be hit severely.

Sale proceeds should be applied shortly in two distributions which will be +/-20

Hi cb25, worth pointing out a few things:

- the range of bonds on our site from ig to high yield and perps tends to be wider than vanilla managed vehicles which tend to have a high concentration in financials and index's. And rather than investing in shares of a vehicle you are investing in debt securities with a maturity date and where you can mix and match. For example if you like P2P then consumer credit plays like Lowell are interesting and more rewarding
- diversity is also increasing as we have had over 75 names on the site and increasing. Also our Robowise service continues to diversify you over time so we'll end up with a 100 or so names
- there is embedded industry diversification in the asset class i.e. there are companies from different industries rather than a concentrated exposure to consumer lending for example. Even some of the big consumer credit firms on our aite have a portfolio thats diversified over hundreds of thousands of borrowers. Plus there is detailed company reporting. Just think how much time people spend teying to get info about defaulted p2p loans in their portfolio and getting transparent info
- our Notes allow you to invest in small size and choose individual bonds to get exposure to you couldnt otherwise buy becuase of high minimum purchase sizes. Not much difference to investing in a manager or platform and its less admin hassle as we deal with consent requests etc.allowing you to focus on the economic exposure. Lending club also offers a Notes structure for example
- in terms of stats we have over 15m (increasing faster now), one default although we are focussed on providing a reflection of the market like a stock exchange (last year default losses for the market were around 1.5%) and 5,000 registered members. In terms of returns these instruments are best viewed on a 3-5 year basis as prices can move up or down with market sentiment but tend to average out at 5-8 % across the segments of debt type we offer. The long run return per the blog article in just under 9% per annum for the high yield as a whole with investment grade lower at around 6.

I hope that helps.

Hi Stevio, 

All of our products are debt instruments and pay interest income. Just think of it like P2P lending but with higher returns (right now) and bigger companies with the only difference that prices can move up or down until maturity arrives. Investing in individual bonds is less risky than stocks because you know the maturity date when you get the face value of the bond back and they rank ahead of shares. Shares are more difficult to understand because everyone values a company differently. Plus high yield bonds have massively outperformed equities over the last 20 years as shown in the blog post.

If you don't like prices moving up or down our smart interest product is effectively like the bonds that Wellesley and others offer with a fixed rate, fixed return and no price movements.

General difference between a fund (in a fund supermarket) versus WiseAlpha products: 

- WiseAlpha products offer bonds and high income products, rather than a share in a fund. Think of us as a bond stock exchange. 

- Many retail bond funds don't invest in the range of corporate bonds WiseAlpha offer and many invest in London ORB stock exchange bonds or low yielding investment grade bonds with low returns and long maturities. Our Smart Interest product is attractive because you can earn 7% without price movements up or down. Think of Smart Interest as like a fund but with fixed annual returns

- You have more choice in the way you invest and can invest in small sizes regularly without lots of transaction fees.

Capital at Risk.