Thought it was time for a little more demystification on bonds as an asset class and how we’ll handle them at Freetrade
Great write up Toby, thanks.
I’ve always been interested in bonds as part of a portfolio but only acquired a few directly without being in an etf.
Only one I now have though is the brewdog bond
7.5% yield and a free drink on your birthday
7.5% and a free drink sounds good
Nice write up! It’s strange how bonds are more complicated than stocks, working out credit risk being the tough part. In the Intelligent Investor book (Benjamin Graham) he recommends buying bond funds/ETF’s even when you’re building your own portfolio of stocks…
Thoughts on WiseAlpha and their corporate bond platform?
Obviously very very limited offering, and questionable liquidity - but are they looking likely to have any heft in this space?
Signed up but ended up not investing in their platform. What put me off was that they are not covered by FSCS, thus if they go bust (losses of ~400k in 2016) you will most likely end up with nothing!
I also don’t like the method you invest in their platform. When you invest, you actually buy their bonds, known as “wiseAlpha Participation Notes” which are backed by the bonds you really want to invest in, rather than investing directly in e.g. Centrica bonds. Thus, WiseAlpha’s assets are not separated from your investments, introducing significant risk that is certainly not worth the 1-2% excess interest you can get from a low fee bond ETF in Freetrade!