Lootman wrote:In the late 1980s you could have bought a basket of gilts for an average yield of 12% with minimal risk to capital. Such a portfolio would have done spectacularly well. So a HY approach can work. But after it working for 35 years and political turmoil swirling around, I'd be less sure now. My own personal red flag is the number of sectors I find to be uninvestible right now - banks, support services, utilities, retail, phones . .
Could you? I was looking after my mother-in-law's investments at the time, and shares with high coupons were usually at a premium. You could buy some gilts with lower yields which were at a discount, 8.75% T97 being a case in point. In 1980 I see that E12.25% 92 was at £86.25 and T13.75% 1993 was at £94.875 when bought, so yes, it was possible for a short period to buy below par with a guaranteed capital profit and a high income, buy later in the 1980s they were at a premium.
TJH