2023 Market Sentiment & Positioning

[limster]

Limster , thanks for pointing this new term bond etf available for offshore investor.. @DevilPlate , Previously , I told you term bond is not available to overseas investors.. It seems that Blackrock has created an offshore equivalent as below in Sep which is domicile in Ireland. You can check them out. However, I am not sure whether there is any WHT. Even if there is a 15% WHT , it will not be worth it.. I will try to buy a small sum in IB to check if there is any WHT.

https://www.blackrock.com/americas-...ishares-ibonds-dec-2025-term-corp-ucits-etf#/​

I bought some ID28 to try. If I hold to 2028, I will get the full 6.16% YTM return as long as no default.

 

[revhappy]

Yea and convexity has improved a lot now with the 10 yr at nearly 5%.

The investor loses 5% if yields rise another 100bps to 6% in the next 12 months, but he gains 15% if yields drop to 4%. This is the complete opposite of how things were when central banks were distorting the treasury market with QE.

You are a real bond pro. I tried to understand the concept of bond convexity, but it went over my head, lol.

I am really bad with equations and maths, but I can understand practical concepts. I understand how call and put options work using practical examples, because I have traded them. I have MBA colleagues in my office who are business analysts and they don't understand calls and puts, lol.

 

[DevilPlate]

Yea and convexity has improved a lot now with the 10 yr at nearly 5%.

The investor loses 5% if yields rise another 100bps to 6% in the next 12 months, but he gains 15% if yields drop to 4%. This is the complete opposite of how things were when central banks were distorting the treasury market with QE.

Yeah the risk reward is so favourable rn.

Thinking of buying more idtl

 

[homer123]

I bought some ID28 to try. If I hold to 2028, I will get the full 6.16% YTM return as long as no default.

Have you received your first distribution? It will confirm any WHT..

 

[limster]

Have you received your first distribution? It will confirm any WHT..

just started only. the main confirmation will actually be in annual report.

since LQDE doesn't have WHT, no reason for this to have

 

[homer123]

just started only. the main confirmation will actually be in annual report.

since LQDE doesn't have WHT, no reason for this to have

Sound good.. Another opportunity to load my account with more bonds!

 

[limster]

Sound good.. Another opportunity to load my account with more bonds!

another point - ID28 has lower expense ratio than LQDE even though they are basically the same type of fund (and LQDE has a much bigger AUM so economies of scale suggest that they can easier cut expense ratio).

This is the 'tactic' that some issuers (except Vanguard) like to use. When they release a new ETF, it usually comes with a lower expense ratio to be competitive with the market. But they do not reduce the expense ratio for similar but more established ETF.

The most famous example is GLD and GLDM (which is State Street) There is absolutely no reason why they should have different expense ratio. Just that GLDM was the newer ETF and to attract new business, I guess they had to have an attractive expense ratio.

 

[homer123]

another point - ID28 has lower expense ratio than LQDE even though they are basically the same type of fund (and LQDE has a much bigger AUM so economies of scale suggest that they can easier cut expense ratio).

This is the 'tactic' that some issuers (except Vanguard) like to use. When they release a new ETF, it usually comes with a lower expense ratio to be competitive with the market. But they do not reduce the expense ratio for similar but more established ETF.

The most famous example is GLD and GLDM (which is State Street) There is absolutely no reason why they should have different expense ratio. Just that GLDM was the newer ETF and to attract new business, I guess they had to have an attractive expense ratio.

I believe ID28 is exactly the same as its US version IBDT which already has a huge holding and AUM.. Probably managed by the same team and do not require additional expense.. Since it is Term bond ETF, it is like buy , hold to maturity and return the money to the investor..Not that complicated compared to LDQE ,,

 

[Jazzbie]

I bought some ID28 to try. If I hold to 2028, I will get the full 6.16% YTM return as long as no default.

I'm new to these bonds ETF.

What are the considerations on buying ID28 vs ID26?

Keen to get some 3-5 years IG bond ETFs with ~6% yields.

Thanks!

 

[limster]

https://forums.hardwarezone.com.sg/...ing-bear-market.6745358/page-3#post-141572545
Good to go back 1 year to May 2022 to see whether market has made any progress. From what I read, IWDA was under $75. Even though it was a good price, some always think it will go even lower, never buy

Those that DCA IWDA since May 2022 should be in the green today since IWDA is now $80.97, even if US$ is slightly weaker.

Its ok to buy IWDA at 88 in Jan 2022, you just had to continue DCA as the price went down, so your average price should be much lower.

IWDA $90!

 

[boringLife-]

IWDA $90!

So what to dca in 2024? My average price for iwda is 69 but I dont think I want to continue buying at 90

 

[limster]

I'm new to these bonds ETF.

What are the considerations on buying ID28 vs ID26?

Keen to get some 3-5 years IG bond ETFs with ~6% yields.

Thanks to the recent rally, YTM of ID28 has plunged to 4.9%

The rally means that I am getting capital gain from a bond fund, which is nice. And at my buying price, I am enjoying a 6% yield to maturity.

But it also means that I am not buying any more. 4.9% not attractive.

Its better to identify good value investments before their prices rally, rather than buying them after their prices increase. Then you can get good yield and margin of safety because you bought at a low buying price. Thats my strategy anyway

 

[Naqsaq]

So what to dca in 2024? My average price for iwda is 69 but I dont think I want to continue buying at 90

That defeats the whole purpose and the meaning of DCA. You're not Averaging the Dollar Cost if you keep switching what you buy.

DCA'ing a world index like IWDA is for people who don't consider being able to beat the market by stockpicking and/or timing the market. If you belong in this category, you should naturally be expecting continuous growth of the market. Thus, you should also be expecting a continuous stream of ATH's without changing your strategy.

Shopping around for ETF's is something very different.

 

[DevilPlate]

Thanks to the recent rally, YTM of ID28 has plunged to 4.9%

The rally means that I am getting capital gain from a bond fund, which is nice. And at my buying price, I am enjoying a 6% yield to maturity.

But it also means that I am not buying any more. 4.9% not attractive.

Its better to identify good value investments before their prices rally, rather than buying them after their prices increase. Then you can get good yield and margin of safety because you bought at a low buying price. Thats my strategy anyway

Ya la, market timing but here many DCA supporters.

 

[limster]

Ya la, market timing but here many DCA supporters.

actually its very interesting. a lot of DCA support for stocks and a lot of speculation in fixed income.

Go to the T-bill thread and you can see so many market timers trying to predict the next interest rate.

every month I bid 3.5% for T-bills to guarantee my allocation as T-bills are just a place to park cash.

A few basis points difference in a 6mth t-bill won't make me rich so I'm not going to waste time trying to place the 'best' bid. On the other, you see people celebrating if they get 4% t-bill, as if they bought Tesla for $50.

 

[DevilPlate]

actually its very interesting. a lot of DCA support for stocks and a lot of speculation in fixed income.

Go to the T-bill thread and you can see so many market timers trying to predict the next interest rate.

every month I bid 3.5% for T-bills to guarantee my allocation as T-bills are just a place to park cash.

A few basis points difference in a 6mth t-bill won't make me rich so I'm not going to waste time trying to place the 'best' bid. On the other, you see people celebrating if they get 4% t-bill, as if they bought Tesla for $50.

Because those Tbills folks mostly very risk adverse….every penny counts. Js like those who spend time looking for best credit card deals etc and tend to spend more without realising it hahaha

 

[limster]

2008 was a great time to start investing. My investment journey more or less began in 2008 as well. I have been a bagholder for STI ETF since STI went below 3,000 in 2008 and repeated this in 2016 and 2020.

my experience with recessions is that the more people scream about it, the less likely that it will happen. also, wars rarely cause recession - when was the last recession that took place during a war? Manufacturing ammo needs a lot of raw materials and machinery, not to mention building ballons and $400,000 missiles to shoot down balloons. I am sad about the war but I am bullish on Australia!

So confirm no recession this year Ah limstar? Some say Powell confirm up interest till recession lei. Like 6%. If cannot then 7%. If still cannot then 10% …..

Commentary: How were so many economists so wrong about the recession?​

https://www.channelnewsasia.com/com...y-recession-inflation-jobs-employment-4012621

Ok confirm!

 

[elvintay07]

https://www.channelnewsasia.com/com...y-recession-inflation-jobs-employment-4012621

Ok confirm!

If today Yellen is in tech, probably she would have lost her job already. Quite buay kan all these economists. I don’t care economist or monkey, follow indian chief blindly quite dangerous. My wife DCA tech and world index. 2023 machiam home run for her. She added more small cap and healthcare last year. ! Maybe 2024 dark horse is healthcare/ small cap

 

[limster]

If today Yellen is in tech, probably she would have lost her job already. Quite buay kan all these economists. I don’t care economist or monkey, follow indian chief blindly quite dangerous. My wife DCA tech and world index. 2023 machiam home run for her. She added more small cap and healthcare last year. ! Maybe 2024 dark horse is healthcare/ small cap

congrats on your wife's disciplined DCA investing. Ignore all the noise and recession callers!

2024 I have also no idea what to do, I guess have to continue DCA VWRD and S&P500.

 

[elvintay07]

congrats on your wife's disciplined DCA investing. Ignore all the noise and recession callers!

2024 I have also no idea what to do, I guess have to continue DCA VWRD and S&P500.

She spend probably 1/10 the effort but trash me on performance. She added a bit of emerging market 5%. Perhaps aiming at the underperforming sectors.