Bonds May Not Be Allowed To Raise Interest Rates.

After the "blitz" rate increase in October, we began to worry that the second rate hike would be sudden. Bond Market and equity market They all trembled with fear. Asking for rumours and rumours every day has become a reality. market One of the routines of people.

However, there are more bad news and always invest, especially those who want to get ahead of the public.

Compared with stocks, those who dare to enter the bond market in a high profile must bear the pressure. Any financial student knows the reason why bonds will fall in the interest rate cycle. Almost no report on fixed income from securities firms or funds is advocating boldly buying bonds. Some bond investment managers are not so pessimistic in terms of their actual operation, but they also dare to disclose their true ideas in a small range of exchanges.

In fact, bonds and stocks are different. Stocks can continue to fall for three years. "Losing time without losing money" is just a masturbation for investors. There are not many uncertain factors to buy corporate bonds. Although the two tier market prices of bonds will also rise or fall, holding the proceeds of maturity is usually locked down when buying. Besides worrying about credit risk, others are just mathematical problems.

Now the AAA corporate debt with a term remaining below five years, and some listed banks' subordinated debt, has a yield close to 5%. Some of the bonds with relatively bad credit ratings already have more than 7% pre tax yields, and more than 5% after tax. As for credit risk, at least in the history of corporate bonds in the mainland stock market, the default rate of these so-called "bad debts" is almost zero.

In contrast, the interest rate of the latest bank fixed interest rate for five years is only 4.20%, and it is a single interest, and it can be translated into a compound interest comparable to that of the bond, even less than 4%. Taking into account the lack of liquidity in the deposits, the interest will be lost in the middle way. Therefore, under normal circumstances, the yield of the high-grade bonds should be slightly lower than the deposit interest rate. No wonder some people say: now the decline of bonds has overdrawn the expectation of raising interest rates one or two times.

I am more interested in some closed bond funds. These funds do not have to consider liquidity risk in the closed period, so they can invest more in high-yield credit bonds and even use repo financing to enlarge their profits. The most aggressive bond portfolio in the current market is expected to get more than 6% of the proceeds, plus the repurchase amplification, which may reach more than 7%. Of course, there is no credit risk.

What is even more attractive is that these funds have a 3%-6% discount in the two tier market. If you buy in the two tier market, it is equivalent to buying a basket of high-yield bond portfolios from 6% off to 3% off. People who like to go to the mall for special sales at the end of the year may feel that the discount is not worth mentioning. But bond assets are different from the famous brand bags, coats and leather boots with high gross margin. A discount of 5% is a great temptation. If the discount rate is calculated, the annual yield of individual closed bond funds may reach two digits.

Although we are worried about inflation and raising interest rates, if we earn more than 7% a year, we won't be able to overcome inflation in three to five years, or even win over the interest rate of bank deposits. That is, our economy has a big problem, and stocks do not know what it will be like.

So I have a more unusual view: if you want to protect your assets, please start thinking about investment bonds, especially the discount bond funds, including some of the robust part of the fund.

If you are not very brave and do not trust my analysis very much, you should at least consider setting up a warehouse after meeting another interest rate increase. If you can't protect your assets, it's dangerous to live on the earth.