A significant proportion of operatives within bond markets don’t really understand yield curves. As once again revealed after Moody’s latest downgrade.
Dear Kevin. I am no longer qualified to offer investment advice so my opinions are informal and noncommittal.
First question: are you a higher rate UK taxpayer?
If so, I’d first of all look at the deep discount gilts. As accretion is not taxable and only the coupon income, they are a cracking buy. If you’re buying for a SIPP, 5yr gilts look fair value; I’d be careful with USTs and stay short.
Thanks for the fast response & fully understand/accept your points in the first sentence,
Whilst I am higher rate tax payer my investment interests revolve primarily family ISAs & SIPPs. The tax treatment was one thing I did understand.
Seem to remember some 6-8 weeks ago you mentioned having bought some gilts ( as did I)
thus the thrust of the question was whether with the yields dipping since then were they were still fair value given my personal take on inflation with the recent increases in any service cost, food etc. confirmed by today's inflation rate announcement,.
Putting the yield drop & inflation together a "real return" is, if anything , very minimal.
Perhaps it is back to bond or credit funds ,albeit up the risk ladder, to get real returns??
Dear Kevin. I am no longer qualified to offer investment advice so my opinions are informal and noncommittal.
First question: are you a higher rate UK taxpayer?
If so, I’d first of all look at the deep discount gilts. As accretion is not taxable and only the coupon income, they are a cracking buy. If you’re buying for a SIPP, 5yr gilts look fair value; I’d be careful with USTs and stay short.
Does that help ?
Dear Anthony,
Thanks for the fast response & fully understand/accept your points in the first sentence,
Whilst I am higher rate tax payer my investment interests revolve primarily family ISAs & SIPPs. The tax treatment was one thing I did understand.
Seem to remember some 6-8 weeks ago you mentioned having bought some gilts ( as did I)
thus the thrust of the question was whether with the yields dipping since then were they were still fair value given my personal take on inflation with the recent increases in any service cost, food etc. confirmed by today's inflation rate announcement,.
Putting the yield drop & inflation together a "real return" is, if anything , very minimal.
Perhaps it is back to bond or credit funds ,albeit up the risk ladder, to get real returns??
Again thanks for the article & reply
Thank you for an excellent article.
Would you consider 1-5 Gilts or Treasuries as currently priced a good investment ?