Ishrc � Discussion Threads

[borderbill] 19/7/2010 15:33

I bought some more of these at 116.2 in mid June and agree they may find it harder going above 120 but will just hold for the yield, a rare commodity nowadays. Bill

[kiwi2007] 14/7/2010 11:07

Back near the top of the 115 / 120 trading range which has run for almost a year now - I'd be tempted to reduce if I could find a better home.

[davebowler] 14/4/2010 10:50

ILH Invesco's High Yield fund is on a 6% discount to NAV (admittedly with higher gearing) whereas this is at NAV

[the bounty hunter] 31/3/2010 15:15

slxx is on a mini bullish run or just range trading?

[kiwi2007] 24/2/2010 11:27

UKPounds 1.6557 and paid on 24/03/10

[davebowler] 24/2/2010 10:26

HDIV has about half of its holdings in variable rate Bonds so is partly insured from the rising interest rate fears and is still on a 7% discount to asset value.

[deadly] 24/2/2010 09:32

It was published

[prokartace] 24/2/2010 09:28

I hope this is a dividend payment. Why wasnt it published and how much was it?

[kiwi2007] 12/2/2010 06:27

Bond on bonds – disaster ahead

Posted by FT Alphaville on Feb 11 19:05.

By the FT's Chris Flood

Government bond markets are facing a decade of "disastrous returns", according to Tim Bond, head of asset allocation at Barclays Capital.

Bond reckons unfavourable demographic trends mean long term-yields in the US and UK will double from current levels over the next ten years, More...

By the FT's Chris Flood

Government bond markets are facing a decade of "disastrous returns", according to Tim Bond, head of asset allocation at Barclays Capital.

Bond reckons unfavourable demographic trends mean long term-yields in the US and UK will double from current levels over the next ten years, moving up to around 10 per cent by 2020.

In its 2010 Equity Gilt Study, Barclays said its analysis of the interaction between demographic trends and bond yields suggest the era of low and stable long-term interest rates is over.

Effectively, the models are suggesting that the shrinkage in the high savings population cohorts and an expansion in the retired population will alter supply demand dynamics in the debt capital markets in a profoundly negative manner.

Ageing populations will lead to an explosion in government debt over the long run:

The unfavourable shift in dependency ratios, combined with sharply increased spending on pensions and healthcare is likely to cause a sustained deterioration in primary fiscal balances and a continuous increase in government debt to GDP ratios.

IMF and OECD projections suggest that the effects of ageing alone will increase debt ratios by 50 percentage points of GDP over the next 20 years:

For the advanced G20 economies, the government debt/GDP ratio is projected to rise from 100% in 2010 to 150% in 2030. Over the subsequent 20 years, debt ratios for these countries are anticipated to rise further, increasing to 275% of GDP by 2050.

And of course the deterioration in government finances - as a result of the credit crisis - has worsened the starting point for the future path of rising indebtedness due to demographic factors:

The deterioration in budget deficits has also provided a notable setback to many countries' strategies for dealing with the long-run effects of aging. Although fiscal discipline has been weak in the US and UK over the past decade, the larger European economies had certainly been following fiscal policies designed to reduce deficits in the short run and thus clear the decks for the anticipated increase in borrowing over the long run. This strategy has now been de-railed by the widening of deficits stemming from the credit crisis.

Mr Bond says it is difficult to avoid the conclusion that national savings within the advanced economies will be insufficient to meet domestic requirements:

The common assumption that future savings flows from the large developing economies will be a ready source of finance for the ageing advanced economies is most probably flawed. The projected trajectory for old age dependency ratios in countries like Brazil, China or Russia are as severe as in the US. It is highly implausible to believe that Africa, the Middle East and India will be capable of funding the rest of the world's growing population of retirees.

Because the rise in old age dependency ratios is common to virtually all significant economies, the idea that a redistribution of global savings flows from surplus to deficit nations might mitigate the impact of ageing on bond markets is a false comfort.

Barclays also says the risk premia embedded in nominal bond yields is likely to rise, as history shows that higher inflation – sometimes hyperinflation – can be the end result of unsustainably high debt/GDP ratios.

Although such an outcome is by no means an historical inevitability, it is certainly the case that high debt ratios increase the temptation for policymakers to engineer higher inflation as a soft option for containing debt/GDP ratios.

Pragmatically, we can take the view that when investors focus on the nearubiquitous trend for substantial increases in debt burdens, they will demand a higher longterm inflation risk premium.

Mr Bond admits that a decade of rising bond yields as forecast by Barclays demographic models appears unlikely from our present, deleveraging, post-crisis perspective, and notes that past few years have been characterised more by an abundance of savings relative to productive investment opportunities.

However, it is likely that this phase represents a high-water mark, to be followed by an inexorable turn in the demographic tide. Over the next two decades, the boomer generation will age into retirement and run down their accumulated savings. An era of capital abundance will gradually turn into an era of capital scarcity. Government debt burdens will rise sharply, with the risk premium demanded for financing these debts increasing as private sector net savings flows dwindle. Given the broad international context for these trends, with similar developments afflicting almost all the world's major economies, the means by which the government debt burdens are eventually curtailed is unclear. As a result, government bond yields are likely to require a significant rise in risk premia to cover the eventuality of default, either outright or through inflation.

[davebowler] 08/2/2010 15:54

HDIV on 9% discount to NAV

[kiwi2007] 07/2/2010 19:28

Bond prices to fall as buy-back ends

By Ellen Kelleher February 5 2010

"....Corporate bonds are also likely to suffer some knock-on effects. As a result, the capital value of bond portfolios could take a hit, advisers warn."

and

"... corporate and high-yield bonds and emerging market debt are more appealing, according to advisers."




Confusing? Maybe they're saying that corporate debt is not particularly attractive but more appealing than UK gilts ?

Personally I've moved more of my Sterling fixed interest into IEMB (emerging market bands) and LQDE ($ corporate).

[davebowler] 26/1/2010 14:40

Bill Gross opinion;

Of all of the developed countries, three broad fixed-income observations stand out: 1) given enough liquidity and current yields I would prefer to invest money in Canada. Its conservative banks never did participate in the housing crisis and it moved toward and stayed closer to fiscal balance than any other country, 2) Germany is the safest, most liquid sovereign alternative, although its leadership and the EU's potential stance toward bailouts of Greece and Ireland must be watched. Think AIG and GMAC and you have a similar comparative predicament, and 3) the U.K. is a must to avoid. Its Gilts are resting on a bed of nitroglycerine. High debt with the potential to devalue its currency present high risks for bond investors. In addition, its interest rates are already artificially influenced by accounting standards that at one point last year produced long-term real interest rates of 1/2 % and lower.

[sicall] 08/1/2010 20:45

Corporate Bond Funds should be treated like any other investment. They should be part of a diversified portfolio.

I would not say they are a better place to "park" cash for a short period of time than anywhere else as you are just as likely to lose some of your capital as you are to gain from the dividend.

As with any investment its all about timing. Having "parked" a lot of cash in them since sept 2008 i actually think its time to start moving some of it out. Which i will be doing over the next few months.

Where will i be putting it? I think there are some very promising high interest paying Investment Trusts i also like some of the preference shares still like AV.A yielding 7.6 % and NWBD at 9.6 % or with a bit higher risk RUSP which yields 12.75%.

DYOR

[davebowler] 30/12/2009 22:06

HDIV NAV up by 3.7% last month.

[tommerralls] 30/12/2009 21:54

Ok so I am new to trading but one of the things I have learned already is not to jump in too quick. I have been learning on and off about trading/investing over the last few years so have some technical knowledge but not a lot!

What are your thoughts on the idea that, when interests rates rise I should short ETF Bonds? This is what I am thinking of doing but not sure when to execute the trade. Any thoughts or observations or criticisms? Seems too obvious to me that Bonds will fall in value (arguably some have already) so maybe my lack of knowledge is clearly evident and I am missing something?

[kiwi2007] 30/12/2009 02:00

I hold slxx with three separate brokers - there's often a week's difference between them crediting my account with the 'divi'.

Also, I'm unsure whether this (115) is a good buying price or not? There's a feeling that gilt yields will be volatile on the upside just prior to the election and every man and his dog are recommending either not to enter into bonds or to sell them, so maybe not?

Or maybe, as so often happens, it would pay to be contrary?

[the bounty hunter] 29/12/2009 17:16

Thanks Colonel

[colonel a] 29/12/2009 11:25

From


Recent Distributions
Currency: GBP
Announcement date Ex-Date Record date Payment date Dividend rate per share
16/11/09 25/11/09 27/11/09 23/12/09 1.6892
17/08/09 26/08/09 28/08/09 23/09/09 1.7821
18/05/09 27/05/09 29/05/09 24/06/09 1.8413
16/02/09 25/02/09 27/02/09 25/03/09 1.9085
17/11/08 26/11/08 28/11/08 24/12/08 1.8234

That's a payment of £1.68 per unit at $115 give or take.
I hold, it did happen.

[the bounty hunter] 29/12/2009 10:50

Was a dividend paid on this recently?
Thanks in advance

[borderbill] 16/12/2009 11:16

annoying this hasnt come back with long gilts as I think the rise in yields may stop here on a few weeks view, Bill

[davebowler] 11/12/2009 15:22

I think the answer is in this presentation;



pages 5,6,7,8,9, I think

[borderbill] 10/12/2009 09:20

Dave

How do you know the split of fixed and variable rate securities here. I have had a look at the factsheet on the Hendersons site but am not sure. Are the variable ones the 'secured loans' and what are they secured against. May have a nibble here if I can satify myself about what I would be investing in. Any advice or sources of more info most welcome. Also puzzled re mention of 16%gearing. They are borrowing money to invest in teh borrowings of others - mmmm - I wonder what the margin is here and if there is any mismatch on duration of borrowing and investments that could catch them out ? Bill

[davebowler] 09/12/2009 20:04

HDIV is on 7%ish yield and 14% below asset value and has a good percentage of its bonds at variable rates- which must be a good thing if rates are at a 300 year low and expected to rise.

[davebowler] 05/12/2009 11:39

Here is what the manager thinks;

[davebowler] 03/12/2009 16:06

HDIV is now on a 10% discount to asset value (which was actually up last month).