Ishrc � Discussion Threads

[borderbill] 15/6/2009 09:56

kiwi

i agree that two etf's would be better than the sum of the parts, certainly less stressful ! My average price is about 102 and I have now taken 2 dividends so this is doing exactly what I wanted, outperform cash. With longer gilts having fallen back and a flat economy I can see these outperforming cash for another couple of quarters yet. Bill

[kiwi2007] 13/6/2009 10:39

iShares SLXX ETF: 9 June 2009

Our view: We looked at this ETF at the tail end of last year, predicting a bounce. In theory, we should have been right. The corporate bond market started rallying from November. However, subordinated bank debt headed south for a couple more months, and the subsequent rally has proved somewhat underwhelming. With a current estimated yield to maturity 7.8% we view the SLXX as a "hold" if owned, but we would not be racing to buy any more.

We would like to see better segregation here for GBP bond ETFs. An investment grade GBP "corporates only" ETF would make a great investment vehicle whilst subordinated instruments could find a home in GBP denominated high-yield ETF. Over to you, iShares.

[sicall] 12/6/2009 00:40

Rising Govt bond yields can be a good sign and not a threat to the economy as so many seem to be arguing these days. Yields have been rising mainly because the economy is recovering instead of collapsing, and deflation is essentially dead; recall it was the fear of depression and deflation that drove 10-year yields so low at the end of last year.

We're not sliding into a depression, were beginning to grow again and money coming out of Gilts and into equities is a start.

[jonwig] 02/6/2009 12:03

Humph - I'm inclined to agree with you.

When govt stocks fell on both sides of the pond last week, I sold my SLXX (xd as it happens) arguing that corporate bonds had no reason to suddenly take on lower yield spreads.
I'm still very much aware of what the bond markets are saying, and it seems to contradict what equities are telling us.
Currently I'm going pretty overweight on index-linked via INXG.

[humphbumph] 02/6/2009 11:52

I have no great expectations of SLXX. I just think of it, as the founder of this thread suggests, as a surrogate for a cash account. A little riskier, of course. I hold at an average of £100.72 but as a very long-term investment (at 7%) without any hurry to liquidate it should be possible to come out without much damage.

[kiwi2007] 02/6/2009 11:42

10 year gilts pushing nearer to 4% yield and, according to the press, every man and his dog moving into corporate bonds ! Maybe time to reduce exposure?

[davebowler] 01/6/2009 11:18

IPE is 75% in Euro High Yield Bonds, run by Paul Reed/Causer and 12% below asset value.

[kiwi2007] 01/6/2009 11:13

or :-

Why corporate bonds still look like a good investment

Published Date: 30 May 2009
By JEFF SALWAY
INVESTORS continue to show strong support for corporate bond funds, despite the increasing optimism being shown by many equity fund managers.
So, is the support for corporate bonds merely "hot money" that could just as quickly desert the asset class when the economy finally turns? Paul Read, manager of the Invesco Perpetual Corporate Bond fund, understandably does not think so.

Valuations are still too low," he said. "Bonds have been a strong source of income at a time when banks aren't paying their customers to keep money there and boards of directors are being very careful with their dividend policy."....more...

[kiwi2007] 01/6/2009 11:11

Warning for bond funds

By Alice Ross

Published: May 29 2009 18:46 | Last updated: May 29 2009 18:46

Bond fund investors are being advised to keep an eye on gilts, amid concerns that further rises in yields could affect the performance of their holdings.

Gilt yields rose this week as government debt was sold off, following fresh concerns over how much the government is borrowing to try to stimulate the economy.
EDITOR'S CHOICE
Overview: Bond markets take centre stage - May-29
Inflation cloud looms large over bonds - May-24
Rising levels of UK debt spark alarm among gilt investors - Apr-24
An unhappy marriage of bonds and equities - Apr-10
Lex: Retail bonds - Apr-13
Defaults poised for record high - Feb-10

But investment experts warned that if yields rose much further, private investors' capital in corporate bond funds could suffer.

Investors have flooded into corporate bonds in recent months, tempted by the high yields at a time when cash rates are near zero.

Mark Dampier at Hargreaves Lansdown said that if yields on 30-year gilts went above 5 per cent, this could cause the value of corporate bonds to fall as much as a fifth.

Many corporate bond fund managers are also wary of inflation and have been moving into shorter-dated gilts.

Managers are aware that if inflation is high, the fixed income from corporate bonds will appear less attractive – which may lead investors to sell their holdings. This could make corporate bond funds less liquid.

Mike Lenhoff at Brewin Dolphin said the rise in yields this week was "clearly not great news for bond funds". But he said that if economies are on the road to recovery, as he believes, this would improve the credit worthiness of companies and give funds an uplift.

Corporate bond funds remain exposed to default risk, as seen this week when Bradford & Bingley said it would miss coupon payments on some of its subordinated debt. However, corporate bond fund managers said the move had been widely expected and was already reflected in prices.

[lbo] 22/5/2009 11:42

UK company bonds fall as S&P cuts rating outlook to negative

[kiwi2007] 18/5/2009 10:13

As against £2.1829 for the same period last year !!

[jonwig] 18/5/2009 07:16

Ex Date: 27th May 2009

Record Date: 29th May 2009

Payment Date: 24th June 2009

£1.8413

[jonwig] 16/5/2009 11:04

LBO- the article seems to be cautioning people to be aware of the differences between government bonds and corporate bonds.
To a lesser extent, the difference between investment grade and high yield corporate bonds.

For the outlook on investment grade (as represented in SLXX) this is a well-reasoned article:

[lbo] 13/5/2009 22:51

Bond funds: not an entirely safe haven

[jonwig] 13/5/2009 12:03

Could be, Kiwi, and the inflation report suggests low CPI and RPI numbers for a considerable time.
On the other hand, INXG (ie. UK index-linked gilts ETF) is probably in a mild uptrend, too.

[kiwi2007] 13/5/2009 11:47

Howard archer at Global Insight commenting on the BoE report:

"We certainly suspect that while latest data and survey evidence have been markedly improved and even hint that the economy could be close to stabilizing, significant relapses remain highly likely and we could well be in for a very bumpy period for some considerable time to come.

Bottom line - interest rates look poised to stay at 0.50% well into 2010. "

Is that the reason for this taking off today?

[sicall] 10/5/2009 01:01

I would recommend anyone looking for a high yield with good liquidity like SLXX have a look at the two High Yield US Bond ETF`s tickers HYG and JNK.

Here are the links.





Both can be bought through iii and both pay MONTHLY dividends. Currently HYG pays about 9% and JNK around 11%. Obviously there is the drawback of currency issues but the liquidity and monthly dividend make up for that.

[borderbill] 08/5/2009 10:19

I think I heard on Bloomberg this a.m. that the proposed QE in Euro land is focused towards buying bank debt.

[kiwi2007] 07/5/2009 13:09

Apparently Goldman went positive on bank debt yesterday.

[jonwig] 07/5/2009 07:42

The latest fund factsheet (dated 31 March) shows about 58% of SLXX portfolio in financials (almost all banks), which is quite a bit lower than previously, I think:

[lbo] 06/5/2009 22:47

Has lower financial exposure/weighting then SLXX

[kiwi2007] 05/5/2009 19:39

I hold but doubt I can add to your knowledge ;o)

[kinbasket] 05/5/2009 18:49

Anyone here have IBCX ??

It's the Eurobond equivalent of SLXX as far as I can see.

Lower yield but it suits me better to have exposure to Euros.

Any thoughts ??

[borderbill] 29/4/2009 11:52

Thanks Dave, will have a look, only 2% down on SLXX now !