Stocks Vs Bonds


(Ketan) #21

Thanks @zygo23554 for your detailed answer and comments, very helpful.
I agree with your observations regarding liquidity in the system and banks flush with money. From debt investment point of view, and equity investment in banking stocks one major variable to track will be credit growth with NPA situation over next couple of quarters. Its a tricky situation for lenders, as well as investors!


(Yogesh Sane) #22

Are you looking to invest in junk bonds or bond funds? Did you find any? Couple of high interest funds I looked at have the same past returns as the regular high duration funds so not sure if they actually have a high YTM or just call themselves so.


(zygo23554) #23

Bond funds with a high YTM of 9.5%+

Do look at the Templeton funds pack (short term, corporate bond opps funds), they are currently running a YTM of 10%+ pre expense ratio at a mod duration of less than 2 years, lot of play in the A category. Other options being the corporate bond funds from Reliance, ICICI and Kotak, these are at a YTM of approx 8.75 - 9% since they play into the AA category

Given that the repo is at 6.25%, anything in excess of 8.75% fits into high YTM in my book.

Disclaimer: I am not a SEBI registered advisor, please due your due diligence on the funds :slight_smile:


(Yogesh Sane) #24

These are all high expense ratio and high exit load funds. I am not planning to keep them for that long and will mostly incur the exit loads. Their YTMs are near 52 week highs so clean price must have dropped recently. That’s something to worry about. High exit load indicate that these are illiquid securities indicating low demand.
Moreover, being an active investor, I can’t imagine buying a fund :slight_smile: I am looking at NCDs that trade like a stock. Generally the ones with annual coupons and high maturity trade with some volume. Ones with monthly coupons have poor liquidity. Also large issues have higher liquidity.

Here are a few I am looking at

These have relatively better liquidity but still not enough to build a large portfolio. Spread is also high.


(Siva kumar) #25

An interesting perspective on the thread topic.

http://morningstar.in/posts/40627/do-stocks-really-outperform-debt.aspx


(Ketan) #26

YTMs have improved for some, here are the latest numbers (NSE prices as of 30/06/17):
RHFL N2 (10.13%), N4 (9.82%)
IIFL N7 (9.46%)
EHFL N6 (9.08% - YTM reduced here ), another one with liquidity is N3 (9.68%)
SBIN N5 (7.79% - YTM reduced here).


(Ketan) #27

I was looking for few funds where we get some decent YTM and low duration, and following twins from Franklin look good: Ultra Short Bond Fund - Super IP and Low Duration. For both, issue is lower credit quality, but I reckon they should be able to manage it better due to shorter durations.
Two other safer bets (at lower YTM) are Invesco Med term bond and Principal credit opp.
Let me know your comments @zygo23554 and @Yogesh_s. Cheers!


(Mute Spectator.) #28

Hi , I am looking for Junk Bonds.
Mostly of the companies which are in the bankruptcy list of the RBI.

Is anyone investing in Junk bonds here ? please help from where to go find more information about it.
Which ones are the most liquid and i would be great if you could share some ideas too :slight_smile:


(Gagan) #29

Dear All,

I also want to build a Portfolio of NCD’s/Debt instruments, currently, I am basically 50%, 50% invested in both Equity and Debt (Mostly Liquid funds), so for debt PF, I think liquid funds are not optimal since these are very short-term and a bit low yield.

Purpose: I want to build Fixed Income PF, so I have peace of mind and I can invest back income form debt PF back to equity on a regular interval, let’s say I want the monthly income of around 1lc from debt PF, what would you suggest the best way to go about it…?

In current scenario’s is 9% yield is achievable(without compromising on the safety of capital), appreciate if any of you guide on this and suggest some names to invest.

Currently, I see SREI EQUIPMENT FINANCE LTD NCD, which is giving 9.6% yield, but I think its a bit risky NCD, shall I consider distributing 5-10lc on each such NCD.

Thank you!
Best Regards,
Gagan


(prashantrane2000) #30

I liked edelweiss platform for initial screening of securities but not ventured into NCD investing as I was skeptical about liquidity and impact cost during exits. Let me know if you have invested and key aspects you need to be aware of


(Gokul Krishnan) #31

Small financial banks are providing interest rates up to 9.25% for senior citizen. Which will be higher than any liquid fund at the moment in the period of 365-727 days. I was checking for my dad to park his funds from surrendering of large cap equity mutual fund.The interest will be paid quarterly.