Investing in bonds (I'm not talking about bond ETFs) seems to be a straight forward procedure as long as the issuer doesn't get into trouble. You know what you have to pay for buying them, you get your interest and you know exactly when you get the lump sum back. That's what I thought. Recently I found happily such an incoming interest payment in my statement of a bond issued by a big French bank (CAC 40) just to be irritated some days later when the transaction was cancelled. Asking the broker about the reeason the reply was some issue with the stock depository. Pament is now pending for nearly a month. Are there any similar expirences?
Trouble with bond investment
- Thread starter gws
- Start date
Hi gws,
I have never invested in single bonds directly, but I have never heard about this issue either.
It's entirely true that a bond is only as safe as the company issuing it. And there is no guarantee that everything will be paid in case of bankruptcy.
However, I think it is really weird that the payment is delayed by a month on a technical issue.
Anybody heard of something like this?
I have never invested in single bonds directly, but I have never heard about this issue either.
It's entirely true that a bond is only as safe as the company issuing it. And there is no guarantee that everything will be paid in case of bankruptcy.
However, I think it is really weird that the payment is delayed by a month on a technical issue.
Anybody heard of something like this?
I have no experience with bonds, sorry, but I may be interested in the option of bond-investing later on. Tough I guess that private investors don't use bonds in Switzerland as much as in most other countries (due to the strong CHF and low interest rate/coupons). Am I right? Maybe you start a poll to find out, Baptiste? Or anybody else can provide informations about a sensible bond investment strategy for swiss privat investors?
You can buy bonds at your local bank or you can use a Swiss Bond ETF (that's what I would do).
But I don't know indeed how common that is. I personally consider my second pillar to be my bond allocation.
But I don't know indeed how common that is. I personally consider my second pillar to be my bond allocation.
Personally I never understood why people diversify when it comes to stocks and not so much when it comes to bonds. I know a few people that just buy bonds of 2-3 companies - that sounds too risky to me!
I started investing in bonds a few years back when reading on WSJ on so called maturity bond ETFs. ishares offers those - another company as well - dont remember the name. Depending on your risk appetite you can choose between treasuries, investment grade, muni and high yield="junk".
A maturity bond ETF (sometimes other terms used) is an ETF that buys bonds with similar duration and has a fixed end date. This is opposed to normal - and much more common - bond ETF that does regular "roll-over" and replaces the bonds so that the ETF doesn't end.
The advantage of buying maturity ETFs is that you can make a so called bond ladder and do some strategic choices. For instance, after yields were dropping in 2022 it looked quite attractive to me to lock in a 5-9% yield in USD for up to 10 years, with an additional chance to sell earlier with a capital gain. Or - assuming you have a date where you will need that money again - you can chose a duration that matches this without exposing yourself to the interest volatility. That's the point of a normal bond - yet with the normal bond ETF that fixed maturity date doesn't work due to the constant rollover.
Another important aspect is the currency. You will find most offers in USD. And indeed I don't see much point to invest in bonds in CHF given the low interest rates. So it only makes sense if you want/can take the USD, EUR, or eg. GBP risk.
I started investing in bonds a few years back when reading on WSJ on so called maturity bond ETFs. ishares offers those - another company as well - dont remember the name. Depending on your risk appetite you can choose between treasuries, investment grade, muni and high yield="junk".
A maturity bond ETF (sometimes other terms used) is an ETF that buys bonds with similar duration and has a fixed end date. This is opposed to normal - and much more common - bond ETF that does regular "roll-over" and replaces the bonds so that the ETF doesn't end.
The advantage of buying maturity ETFs is that you can make a so called bond ladder and do some strategic choices. For instance, after yields were dropping in 2022 it looked quite attractive to me to lock in a 5-9% yield in USD for up to 10 years, with an additional chance to sell earlier with a capital gain. Or - assuming you have a date where you will need that money again - you can chose a duration that matches this without exposing yourself to the interest volatility. That's the point of a normal bond - yet with the normal bond ETF that fixed maturity date doesn't work due to the constant rollover.
Another important aspect is the currency. You will find most offers in USD. And indeed I don't see much point to invest in bonds in CHF given the low interest rates. So it only makes sense if you want/can take the USD, EUR, or eg. GBP risk.
Sound advice, thanks, I wasn't even aware of theese defined maturity bond etfs. In the end it comes down to the question, if you are willing to accept the currency risk when investing in bonds. Maybe a route to go could be to balance the currency risk out by increasing the investments in CHF stock etfs accordingly.
