US High Yield (HY) Bond

zumaba

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In today's The Sunday Times investment section, there is an ahneh from SCB talking about the preference on US High Yield (HY) Bonds.

any guru here to share the idea on the US High Yield HY Bonds, and is there any such product available in SG market? tks
 

rayzzzz82

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what is the average yield and what is the commission charge of this counter? any tax involved?
 

eboy

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Another meaning of high yield is junk bonds

It's still ok Just as Long as you Know what you are getting into
 

BBCWatcher

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Trading costs (including fund transfer and currency conversion costs) will mostly depend on your choice of broker and bank, although the London Stock Exchange will charge something. All of the funds I'm about to describe are not recommended for U.S. persons.

SHYU, domiciled in Ireland, looks a bit expensive to me. The fund managers collect 0.50%/year. SDHY is pretty similar but invests in shorter term corporate bond maturities and has a 0.45% expense ratio. HYLD is similar again but invests in a more global index of corporate bonds, with a 0.50% expense ratio. These are all BlackRock iShares ETFs.

If you're considering any of these ETFs then I'd also have a look at what State Street offers, specifically SJNK, also domiciled in Ireland and traded on the London Stock Exchange, but with a total expense ratio of 0.40%. SJNK is for U.S. dollar denominated high yield corporate bonds. If you prefer euro denominated bonds then there's JNKE, also with a 0.40% TER. These two ETFs look like slightly more affordable options than what BlackRock offers.

I assume this question arises because junk bond funds have had a good run recently. That's often what happens, that somebody gets excited about an investment (or "investment") when its price has increased recently. That's precisely the wrong time to get interested in something if you're a buyer. You should be getting progressively more interested in an investment when it's getting cheaper, other things being equal. "Apples are 15% more expensive now. Time to stock up on apples, right?" Wrong, usually -- although I certainly appreciate those who behave that way since they're helping me out. ;)
 
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wahkao3

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In today's The Sunday Times investment section, there is an ahneh from SCB talking about the preference on US High Yield (HY) Bonds.

any guru here to share the idea on the US High Yield HY Bonds, and is there any such product available in SG market? tks

hindsighed comment that have absolutely no value add to investment
he is just saying something that has happened. The prices are already reflected.

in future leh?
no1 knows.... i bet this **** also dunno
 

w1rbelw1nd

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SHYU, domiciled in Ireland, looks a bit expensive to me. The fund managers collect 0.50%/year. SDHY is pretty similar but invests in shorter term corporate bond maturities and has a 0.45% expense ratio. HYLD is similar again but invests in a more global index of corporate bonds, with a 0.50% expense ratio. These are all BlackRock iShares ETFs.

If you're considering any of these ETFs then I'd also have a look at what State Street offers, specifically SJNK, also domiciled in Ireland and traded on the London Stock Exchange, but with a total expense ratio of 0.40%. SJNK is for U.S. dollar denominated high yield corporate bonds. If you prefer euro denominated bonds then there's JNKE, also with a 0.40% TER. These two ETFs look like slightly more affordable options than what BlackRock offers.

https://uk.spdrs.com/etf/spdr-barclays-05-year-us-high-yield-bond-ucits-etf-SYBK-GY

https://www.ishares.com/uk/individual/en/products/251833/ishares-high-yield-corporate-bond-ucits-etf

Links for those interested to do their own comparison...

Actually both seems to be quite comparable, with SJNK giving a slightly higher distribution yield than IHYU, which could be due to IHYU not giving out dividends yet (from what I read dividends are distributable in May and November for IHYU, but Jan and July for SJNK).

The higher expense ratio can offset by the benefit of greater diversification as IHYU has almost double the holdings of SJNK (1028 versus 522)

Will definitely consider changing/diversifying to SJNK. Thanks for the sharing :o:o
 

limster

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SJNK holds bonds for a shorter period of time since all their bonds are 0-5 years. That means every year the manager must look for new bonds to replace those that mature (or default). This rollover is not without risk. The replacement bonds may not be as good in terms of yield etc.

The 3%+ from an investment grade bond ETF like LQDE is good enough for me, and also lower expense ratio. :D
 

limster

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i went to have a look at todays trading volume

IHYU: Volume 282k
SJNK: Volume 0
 

Shiny Things

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I assume this question arises because junk bond funds have had a good run recently. That's often what happens, that somebody gets excited about an investment (or "investment") when its price has increased recently. That's precisely the wrong time to get interested in something if you're a buyer. You should be getting progressively more interested in an investment when it's getting cheaper, other things being equal. "Apples are 15% more expensive now. Time to stock up on apples, right?" Wrong, usually -- although I certainly appreciate those who behave that way since they're helping me out. ;)

Goddammit, BBCWatcher, you're getting quicker than me on the answers to all these questions :D

That said, yep, this is all correct. Junk bonds had a great run in 2016, though that's mostly due to base effect; if you measure from February 2016 (when everyone thought the sky was falling), then any subsequent measurement is going to look pretty good. And you don't want to buy stuff after it's already had a run-up; that's the entire point of a rebalancing strategy, you want to sell the things that have gone up.
 

emanon86

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Maybe we will have a BBCWatcher Club Thread?

Anyway thank you both for helping out fellow forumers all the time
 
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