Fixed interest bonds
Discussion
Ginge R said:
JulianPH said:
Just a cautionary note on investing in bonds. There are many companies (not suggesting the ones in the link) that are issuing bonds at the moment that are complete scams.
They are heavily marketed to people (often as a SIPP investment) and some are paying up to 30% commission to the people selling them. They look respectful, but are not. If you get cold called about investing in a bond (or an investment portfolio that holds them) you can pretty much guarantee you are being scammed.
The FCA is on to these, but the sale gangs move pretty quickly. Avoid like the plague.
If you want to invest in this type of bond (which is effectively lending a company money) make sure it is from a strong company you know of.
Wise words. No suggestion, of course, that this particular bond is one that Julian refers to, but his insightful counsel emphasises the importance of choosing a SIPP provider that researches diligently and doesn’t allow advisers to use it to flog any old rubbish.They are heavily marketed to people (often as a SIPP investment) and some are paying up to 30% commission to the people selling them. They look respectful, but are not. If you get cold called about investing in a bond (or an investment portfolio that holds them) you can pretty much guarantee you are being scammed.
The FCA is on to these, but the sale gangs move pretty quickly. Avoid like the plague.
If you want to invest in this type of bond (which is effectively lending a company money) make sure it is from a strong company you know of.
The letter relates to an overdue dividend payment. The situation remains fluid and extant. My understanding is that this was just one of a few similar bonds sold within the Greyfriars Six Portfolio, following a recommendation to transfer out of a Defined Benefit pension scheme.
All I can do is agree with Julian’s expert comment. Research is absolutely vital.
All I can do is agree with Julian’s expert comment. Research is absolutely vital.
I am trying and failing to see anything very attractive about buying fixed interest bonds at the moment.
Interest rates are more likely to rise than fall, which means that the capital value of bonds is more likely to fall than rise. Added to which many (most) decent bonds e.g. gilts are valued over par, which means that if they are held to maturity there is a guaranteed capital loss.
There are some dodgy schemes around too - non-FCA-regulated bonds issued by private companies that are not liquid, and even a firm punting 'bonds' where you are effectively financing someone's car... very PH, but perhaps not very wise...
Interest rates are more likely to rise than fall, which means that the capital value of bonds is more likely to fall than rise. Added to which many (most) decent bonds e.g. gilts are valued over par, which means that if they are held to maturity there is a guaranteed capital loss.
There are some dodgy schemes around too - non-FCA-regulated bonds issued by private companies that are not liquid, and even a firm punting 'bonds' where you are effectively financing someone's car... very PH, but perhaps not very wise...
Ayahuasca said:
I am trying and failing to see anything very attractive about buying fixed interest bonds at the moment.
Interest rates are more likely to rise than fall, which means that the capital value of bonds is more likely to fall than rise. Added to which many (most) decent bonds e.g. gilts are valued over par, which means that if they are held to maturity there is a guaranteed capital loss.
There are some dodgy schemes around too - non-FCA-regulated bonds issued by private companies that are not liquid, and even a firm punting 'bonds' where you are effectively financing someone's car... very PH, but perhaps not very wise...
The bonds in this context, aren’t savings bonds, but investment bonds. Bond is the most abused word in the financial services lexicon. There’s all sorts of investment bond garbage out there - environmental recycling developments, bio energy production bonds, holiday appartment developments, loans to holding companies etc. Interest rates are more likely to rise than fall, which means that the capital value of bonds is more likely to fall than rise. Added to which many (most) decent bonds e.g. gilts are valued over par, which means that if they are held to maturity there is a guaranteed capital loss.
There are some dodgy schemes around too - non-FCA-regulated bonds issued by private companies that are not liquid, and even a firm punting 'bonds' where you are effectively financing someone's car... very PH, but perhaps not very wise...
As Julian wrote, a year or two after the FCA wrote its Dear CEO letter on the subject of these bonds, they are invariably sold via “a SIPP investment”. He’s right. You have to be very careful what company you’re using and what investment you’re buying. Whether it’s through disgraced vehicles such as Greyfriars Portfolio 6, ABC Bond, Strand Capital, or more recently, the Port Talbot steelworkers’ rip off etc etc etc, there’s all manner of alleged cowboys and/or crooks out there, or simply incompetent, greedy folk who (for reasons known to themselves) simply and inexplicably let it happen.
Julian, you wisely mentioned the importance of avoiding these types of investments in a SIPP.. what sort of due diligence do you do to ensure clients don’t fall prey to (for instance) bad DB pension transfer advice delivered by known or suspected rogue advisers on an industrial scale? It must be a nightmare trying to keep up?
chip* said:
No, they are not...I have just listened to a BBC radio broadcast on this and it does appear to show all the signs of a Ponzi scheme.(20% introducers commission, recycling new investment to pay returns on earlier investments, claiming to own property that it does not, etc.).
To answer Ginge R for the umpteenth time on his comment above, we only allow clients to access third party investments though our SIPPs though FCA authorised and regulated financial advisers with the appropriate permissions.
We further only allow investments with FCA authorised and regulated third party investment providers - and even then strictly prohibit investments in non-standard assets - and make all parties sign to agree this.
He mentions 'rogue' regulated financial advisers, I would call them con artists. They are incredibly convincing and highly difficult to spot (and these are the FCA regulated ones I am talking about).
https://www.ftadviser.com/pensions/2020/01/10/trou...
Not very likely to come out of review as purpose of review is probably to buy time to finish off the true business activity.
Not very likely to come out of review as purpose of review is probably to buy time to finish off the true business activity.
Gassing Station | Finance | Top of Page | What's New | My Stuff