Bonds

[cbc]

Thanks Syd for ur reply.

I'm going to look into it m8. Sounds like you could almost 'straddle' ur position by buying floating and fixed with the possibility of a capital gain in either direction.

 

[sydboy007]

Thanks Syd for ur reply.

I'm going to look into it m8. Sounds like you could almost 'straddle' ur position by buying floating and fixed with the possibility of a capital gain in either direction.

Best to think of bonds as providing a definite yield, rather than aiming for a capital gain.

If you are keen on bonds I'd suggest checking out fiig securities and signing up for their newsletter the wire. It comes out each wednesday and is very informative. As with all things financial they have a bias to fixed income / floating rates securities, but I've learned a lot from them over the last 8 months. They can also give you an idea of some of the bonds you can invest in. For the retail market there's probably 20-25 easily available.

On the ASX there's AKY (bonds) and AYF (hybrids) - have both in my SMSF. They provide a good yield. IMHO anything offering over 6% in the present market with relatively low risk is a pretty good deal.

 

[sebfox]

Buying Bonds on the ASX

Hi

I have just started looking into “Fixed Income” products and corporate bonds in particular. I am aware that these can be purchased at the initial offering or via a broker on the over-the-counter (‘OTC’) market but I also understand that some bonds can be traded on the ASX.

It seems preferable to me to be able to buy the bond on ASX as the trading costs via an online service are lower and are known whereas via a specialist broker no firm costs are quoted i.e.: it will only be a percent or so (which is too vague for my liking). Also a percent is quite a lot if as in my case I may only hold the bond for a year or two.

Also for those that are traded on the ASX you can see how liquid they are, so by choosing a heavily traded one you would have the option of being able to get out and sell the bond at short notice. I understand that you can sell your OTC bonds as well but you are up for another percent or so when you do that and also there is no guarantee as to how long the sale process make take (I don’t know how liquid the parcel of bonds I have purchased through them are).

I subscribe to a research news letter that provides some information on ASX traded bonds.

So are there any advantages in using a specialist broker? E.g.: The range of bonds that they have access to?

Thanks

 

[sydboy007]

Re: Buying Bonds on the ASX

Hi

I have just started looking into “Fixed Income” products and corporate bonds in particular. I am aware that these can be purchased at the initial offering or via a broker on the over-the-counter (‘OTC’) market but I also understand that some bonds can be traded on the ASX.

It seems preferable to me to be able to buy the bond on ASX as the trading costs via an online service are lower and are known whereas via a specialist broker no firm costs are quoted i.e.: it will only be a percent or so (which is too vague for my liking). Also a percent is quite a lot if as in my case I may only hold the bond for a year or two.

Also for those that are traded on the ASX you can see how liquid they are, so by choosing a heavily traded one you would have the option of being able to get out and sell the bond at short notice. I understand that you can sell your OTC bonds as well but you are up for another percent or so when you do that and also there is no guarantee as to how long the sale process make take (I don’t know how liquid the parcel of bonds I have purchased through them are).

I subscribe to a research news letter that provides some information on ASX traded bonds.

So are there any advantages in using a specialist broker? E.g.: The range of bonds that they have access to?

Thanks

TBH not exactly sure. I don't think there's many true listed corporate bonds on the ASX. Most of them are hybrids.

Fed Goverment bonds are now on the ASX, but they provide pretty slim yield.

I was hoping with teh changes planned to be made in relation to corporate bonds we might eventually have a good listed bond market, but the changes have now lapsed due to the election and so far it doesn't seem to be on the Coalitions radar

I feel we're so far behind the USA / japan / Europe in regards to listed corporate bonds. They're perfect within a SMSF.

I can highly recommend FIIG securities. They're really helpful and can help you to buy a 50K bond holding with parcel size down to 10K

 

[sebfox]

Re: Buying Bonds on the ASX

TBH not exactly sure. I don't think there's many true listed corporate bonds on the ASX. Most of them are hybrids.

Fed Goverment bonds are now on the ASX, but they provide pretty slim yield.

I was hoping with teh changes planned to be made in relation to corporate bonds we might eventually have a good listed bond market, but the changes have now lapsed due to the election and so far it doesn't seem to be on the Coalitions radar

I feel we're so far behind the USA / japan / Europe in regards to listed corporate bonds. They're perfect within a SMSF.

I can highly recommend FIIG securities. They're really helpful and can help you to buy a 50K bond holding with parcel size down to 10K

Thanks very much for your reply. Yes I am aware of brokers such as the one you mentioned and if I could commit to being able to hold the investment for the longer term then the benefits of being able to access the OTC market and the wider selection of bonds may well justify the additional brokerage margin that one is charged. I am assuming that the buy and sell costs of a very liquid ASX listed bond or hybrid will be less than the commission that I would pay to buy and sell via a broker.

When I have learnt a bit more about them (so as to be able to compare apples with apples) and how to value then I will calculate what’s the better approach over a range of time periods.

Ps. I have emailed this same question to the “Your Money, Your Call - Bonds” program on the Sky News Australia channel, so will see what they think.

 

[Garpal Gumnut]

Is anyone on ASF interested in Bonds atm, thinking more of Oz Govt. Bonds for the coming Apocalypse.

Any experience in buying or selling them, how to go about it, any tips etc.

Not an exciting subject but any advice welcome.

I've been through the ASX site primer on bonds, but looking more for practical experience of ASF members.

gg

 

[Triathlete]

The only bonds I have are corporate bonds and deal through www.fiig.com.au
Starting portfolio needs to be $50k then can add in 10K lots.

 

[galumay]

I also used to hold some corporate bonds through FIIG. In the end I decided it was the epitome of worsification and got out of them. Govt bonds are even worse, not sure they would be much use in an apocalypse! Maybe you could burn them to fend off the zombies?

 

[Value Collector]

Is anyone on ASF interested in Bonds atm, thinking more of Oz Govt. Bonds for the coming Apocalypse.

Any experience in buying or selling them, how to go about it, any tips etc.

Not an exciting subject but any advice welcome.

The closet thing I have to Bonds is some 5 and 3 year loans I made on Rate Setter at between 8% - 9%

I am using it as a way to hold part of the cash reserve that I live off, it pays Principle and interest payments back to you monthly.

 

[john5]

im interested but dont know enough about them yet, i know people buy and sell them and (i think) can make a profit on that, i really just want to be able to have an income effective way to store cash while on the hunt for my next opportunity/waiting for the price to be right

 

[Value Collector]

im interested but dont know enough about them yet, i know people buy and sell them and (i think) can make a profit on that, i really just want to be able to have an income effective way to store cash while on the hunt for my next opportunity/waiting for the price to be right

Do you have a home or investment loan? If so a an interest offset account is a great place to store cash short term.

Other wise I think you are basically stuck with the High interest cash accounts, which at the moment are "high interest" in name only.

The Rate setter company I mentioned above is good, but it is more of a medium to longterm thing, because your money is locked away longer, they do have 1 month and 1 year loans, but the interest rate is much lower.

 

[john5]

no vc i dont have any of those, indeed my high interest savings account, these days, often finds itself below the rate of inflation, it's a borrowers market ...

 

[Value Collector]

no vc i dont have any of those, indeed my high interest savings account, these days, often finds itself below the rate of inflation, it's a borrowers market ...

Have a look at rate setter.

 

[Value Collector]

A bond that is over 300 years old and still paying interest.

 

[Miner]

Folks
This is an open question for any one to respond please.
Where and how do I buy Government and other bonds in Australia . Considering the gain is bare minimum, who are the low priced brokers if any ?
Alternatively any stocks /index fund /managed funds to buy on bonds ?

 

[Zaxon]

Folks
Where and how do I buy Government and other bonds in Australia . Considering the gain is bare minimum, who are the low priced brokers if any ?
Alternatively any stocks /index fund /managed funds to buy on bonds ?

You should be able to buy bonds on the "secondary market", just like any other share. Firstly find a list of the bonds:

etc.

Looking it the code on your broker's site:


Press Buy. I'm not sure how liquid the Australian bond market is, however.

There are plenty of bond ETFs.

etc

The cheapest brokers I know of are SelfWealth and CMC Markets.

 

[Value Collector]

Folks
This is an open question for any one to respond please.
Where and how do I buy Government and other bonds in Australia . Considering the gain is bare minimum, who are the low priced brokers if any ?
Alternatively any stocks /index fund /managed funds to buy on bonds ?

Check out rate setter, it’s a good alternative to bonds in my opinion.

 

[Miner]

Many thanks @Zaxon and @Value Collector for you valued feedback.

 

[HelloU]

Folks
This is an open question for any one to respond please.
Where and how do I buy Government and other bonds in Australia . Considering the gain is bare minimum, who are the low priced brokers if any ?
Alternatively any stocks /index fund /managed funds to buy on bonds ?

was gunna say corporate bonds trade on the asx as xtb's (ticker ytm***) but i spose i am still on ignore with u ya big lug so will just randomly post that here anyway. You will need to be very aware of the payment dates unless u enjoy surprises (of the nasty kind). ur usual broker should be able to do the asx shuffle for u for ytm tickers.
(who thinks sol is still going down?)

 

[Bill M]

Check out rate setter, it’s a good alternative to bonds in my opinion.

This site looks very interesting. I've read some of the FAQ's but I was wondering if there was anything that you might have found as a user that perhaps we should know about? In other words, is there anything that you find annoying or anything that you might not be happy with? Thanks.