LCF 2 year bond 6.5%
Discussion
I've been looking at https://www.londoncapitalandfinance.co.uk/bonds and it seems to good to be true. 6.5% for a 2 year fixed bond.
has anybody else used these guys? should I be signing up today.
has anybody else used these guys? should I be signing up today.
Structure looks reasonable. If the pool of creditors is large, they're spread across a range of business activities and the firm issuing the bonds isn't taking a huge slice of the interest, they might be fair value.
Clearly you shouldn't fixate on the return being offered. The return means nothing unless you fully understand the associated risk. What's the likelihood that one or more names go bust? If they do, how much will you actually be able to recupe from their assets?
Clearly you shouldn't fixate on the return being offered. The return means nothing unless you fully understand the associated risk. What's the likelihood that one or more names go bust? If they do, how much will you actually be able to recupe from their assets?
Appears to be an open ended version of a BDC.
If I was going to put money in that direction, I'd like a little bit of the equity side and closed (CEF)
But if it's Divs you are after check the portfolio for diversity and its largest positions.
Not sure I'd risk it on Vietnamese nail salons and kebab shops.
After thought (edit)
Why not look for a closed end equivalent, that way you always have an exit and you could possibly buy in at a discount making the yield slightly better
An open ended fund like this will likely have early sell penalties (didn't check, but probably has)
Blackrock do a bond CEF.
If I was going to put money in that direction, I'd like a little bit of the equity side and closed (CEF)
But if it's Divs you are after check the portfolio for diversity and its largest positions.
Not sure I'd risk it on Vietnamese nail salons and kebab shops.
After thought (edit)
Why not look for a closed end equivalent, that way you always have an exit and you could possibly buy in at a discount making the yield slightly better
An open ended fund like this will likely have early sell penalties (didn't check, but probably has)
Blackrock do a bond CEF.
Edited by jeff m2 on Tuesday 13th September 18:08
Company is based a long way from London...
https://www.google.co.uk/maps/place/London+Capital...
Looks to me like a Ponzi scheme, don't forget Bernie Madoff.
https://www.google.co.uk/maps/place/London+Capital...
Looks to me like a Ponzi scheme, don't forget Bernie Madoff.
It looks like it is one chap who has been up and running for just a few weeks. Might be worth giving it time to see what performance he can actually generate. If they are opting up investors to sophisticated then there may be no recourse to FSCS although I think this changed recently for some products but it certainly means they don't have as much disclosure over the products.
If he is taking in money to lend it out then he need an awful lot of investment to generate enough money to pay his costs and I'd ask him if he has a team who analyse the requests for loans or whether he is just doing it in his own or even just farming it all out to a larger entity, whereby he is just a sales guy collecting investment.
I think you'd want to know more about his office and business structure before making a truly informed decision.
If he is taking in money to lend it out then he need an awful lot of investment to generate enough money to pay his costs and I'd ask him if he has a team who analyse the requests for loans or whether he is just doing it in his own or even just farming it all out to a larger entity, whereby he is just a sales guy collecting investment.
I think you'd want to know more about his office and business structure before making a truly informed decision.
We had an enquiry about this same firm a few months ago:
Setting up a SIPP to hold a fixed term bond?
Setting up a SIPP to hold a fixed term bond?
liam1986 said:
I've been looking at https://www.londoncapitalandfinance.co.uk/bonds and it seems to good to be true. 6.5% for a 2 year fixed bond.
has anybody else used these guys? should I be signing up today.
Yes, it is to good to be true.has anybody else used these guys? should I be signing up today.
It is not a "Bond" in anything other than they call it one to try and make the product appear more appealing. In reality you are making a loan to a company who in turn loan this to other people. You are basically giving them free money for them to loan to others at a higher rate than they are paying you. Any default and you lose your money whilst the company loses nothing.
Don't touch it unless you are prepared accept a loss.
Yup. 6% for risking 100% of your capital and having absolutely no say or control while your 'agent' runs no risk at all doesn't seem remotely sane.
Such is the nature of our low interest market that many such schemes exist that mispricing the risk/return so hideously.
It's even worse when you consider that they will be lending to businesses that have absolutely no chance of borrowing conventionally because they are deemed toxic. I suspect that if you actually looked at the businesses being lent to you wouldn't touch them with a barge pole or you'd want as minimum 50%+ return plus solid guarantees such as their house, children and limbs.
Mini bonds are essentially toxic, untouchable debt with turd polish applied and flogged to the unsuspecting.
Such is the nature of our low interest market that many such schemes exist that mispricing the risk/return so hideously.
It's even worse when you consider that they will be lending to businesses that have absolutely no chance of borrowing conventionally because they are deemed toxic. I suspect that if you actually looked at the businesses being lent to you wouldn't touch them with a barge pole or you'd want as minimum 50%+ return plus solid guarantees such as their house, children and limbs.
Mini bonds are essentially toxic, untouchable debt with turd polish applied and flogged to the unsuspecting.
liam1986 said:
I've been looking at https://www.londoncapitalandfinance.co.uk/bonds and it seems to good to be true. 6.5% for a 2 year fixed bond.
has anybody else used these guys? should I be signing up today.
I think if you have to come on a forum to ask these questions, the answer is leave it well alone.has anybody else used these guys? should I be signing up today.
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