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low risk investment instead of cash waiting for investment

Gilts, bonds, and interest-bearing shares
air04
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low risk investment instead of cash waiting for investment

#186416

Postby air04 » December 12th, 2018, 5:48 pm

Hi,

I have been trying to find out if there is any money market investment that could pay around 1-2%(bank interest rate) with low risk and full liquidity.

Basically, I have a lot of cash waiting(for a long time) for a home in my SIPP and ISA(both with HL). I am not confident of any investment at the moment. So was wondering about it, really a instant savings account (may be a bit more risk than that) in a SIPP/ISA.

I would proabaly say no to funds as HL will take 0.45%. ETF/ IT / some other is fine. I have not been able to find something that is in GBP and holds GBP assets. There are some like https://www.lyxoretf.co.uk/en/instit/pr ... 136894/gbp , they hold USD assets, and I am not happy to buy USD using GBP at the moment.

Any ideas/recommendation.

Thanks in advance,
ap

colin
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Re: low risk investment instead of cash waiting for investment

#186913

Postby colin » December 14th, 2018, 6:05 pm

Ishares FLOS

richfool
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Re: low risk investment instead of cash waiting for investment

#186942

Postby richfool » December 14th, 2018, 8:54 pm

colin wrote:Ishares FLOS

Colin, FLOS holds, or should I say tracks, Dollar denominated floating rate bonds, albeit hedged back to and quoted in sterling.

https://www.justetf.com/uk/etf-profile. ... 00BF7TPM11

The OP wanted to avoid buying dollar assets currently.
air04 wrote:I would proabaly say no to funds as HL will take 0.45%. ETF/ IT / some other is fine. I have not been able to find something that is in GBP and holds GBP assets. There are some like https://www.lyxoretf.co.uk/en/instit/pr ... 136894/gbp , they hold USD assets, and I am not happy to buy USD using GBP at the moment.

colin
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Re: low risk investment instead of cash waiting for investment

#187015

Postby colin » December 15th, 2018, 10:43 am

ishares ERNS

air04
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Re: low risk investment instead of cash waiting for investment

#187065

Postby air04 » December 15th, 2018, 2:06 pm

Thanks All.

I am ok with USD hedged. The reason I was not for USD ones is that I did not want the currency fluctuations with the brexit in place. It went from 1.5 to 1.2+, and I do not want a large loss IF it goes the other way.

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Re: low risk investment instead of cash waiting for investment

#187249

Postby SKYSHIP » December 16th, 2018, 2:46 pm

air04 - I too have an excess of cash in my SIPP, so in light of Balfour Beatty's (BBY) excellent Trading Update on Friday, decided to add to my existing holding in BBYB, the 10.75% CULS maturing Jul'20 - now less than 19 months away.

Buying at 107.95p means 108.54p inc. expenses. At that level the Gross Redemption Yield = 4.46%pa. Not a great return; but in these uncertain times...

See the BBYB thread here:

viewtopic.php?f=52&t=14468&p=187247#p187247

Itsallaguess
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Re: low risk investment instead of cash waiting for investment

#187254

Postby Itsallaguess » December 16th, 2018, 3:10 pm

SKYSHIP wrote:
air04 - I too have an excess of cash in my SIPP, so in light of Balfour Beatty's (BBY) excellent Trading Update on Friday, decided to add to my existing holding in BBYB, the 10.75% CULS maturing Jul'20 - now less than 19 months away.

Buying at 107.95p means 108.54p inc. expenses. At that level the Gross Redemption Yield = 4.46%pa. Not a great return; but in these uncertain times...

See the BBYB thread here:

viewtopic.php?f=52&t=14468&p=187247#p187247


Single-company risk as a suggestion for a 'low risk investment instead of cash'?

Not too sure at all about that....especially when we can still hear the Carillion stories echoing around....

Cheers,

Itsallaguess

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Re: low risk investment instead of cash waiting for investment

#187610

Postby toofast2live » December 18th, 2018, 9:17 am

colin wrote:ishares ERNS


Better off keeping cash under the mattress.

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Re: low risk investment instead of cash waiting for investment

#187623

Postby AleisterCrowley » December 18th, 2018, 10:22 am

toofast2live wrote:
colin wrote:ishares ERNS


Better off keeping cash under the mattress.


Why ?
Genuine question - I have the same problem, a large dollop of cash sitting in my ISA doing nowt. I was looking at ERNS as a potential home, but still don't understand the risks - i.e. is there a risk of permanent capital loss if interest rates rise?

From memory the yield was about 0.8%, which beats most mattresses but lags decent savings accounts

colin
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Re: low risk investment instead of cash waiting for investment

#187639

Postby colin » December 18th, 2018, 11:10 am

- i.e. is there a risk of permanent capital loss if interest rates rise?

No not permanent,most of the bonds will roll over within a year reflecting the new interest rate, and because it's so short term when interest rates look like rising losses should be a fraction of a percent, problem is expected returns are barely more than the charge so unless you have a good reason for not wanting to hold cash I do not see the point.

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Re: low risk investment instead of cash waiting for investment

#187650

Postby toofast2live » December 18th, 2018, 11:30 am

AleisterCrowley wrote:
toofast2live wrote:
colin wrote:ishares ERNS


Better off keeping cash under the mattress.


Why ?
Genuine question - I have the same problem, a large dollop of cash sitting in my ISA doing nowt. I was looking at ERNS as a potential home, but still don't understand the risks - i.e. is there a risk of permanent capital loss if interest rates rise?

From memory the yield was about 0.8%, which beats most mattresses but lags decent savings accounts


ENRS has a negative return over many time periods, last time I looked.

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Re: low risk investment instead of cash waiting for investment

#187657

Postby AleisterCrowley » December 18th, 2018, 11:39 am

https://www.ishares.com/uk/individual/e ... ugh=true#/

Not the way I read it ? Looks like TR in the range 0.6-0.9%

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Re: low risk investment instead of cash waiting for investment

#187715

Postby Lootman » December 18th, 2018, 2:12 pm

toofast2live wrote:
colin wrote:ishares ERNS

Better off keeping cash under the mattress.

For access and anonymity, perhaps. But ERNS is effectively a money market fund in ETF form, and seems unlikely to lose value in the way that a long-dated bond fund can. Again, credit risk is minimal. Interest rate is less than 1%, but would rise in a rising rate environment.

The one issue is that the income might be deemed to be dividends rather than interest, and that might have a tax consequence for some investors.

air04
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Re: low risk investment instead of cash waiting for investment

#187749

Postby air04 » December 18th, 2018, 3:57 pm

Thanks a lot to all. I really appreciate your views.

FLOS, I looked at the returns, they were very low, probably hedging has a cost.

I have more than enough of BBYB, bought before the current dividend.

I went for ERNS, and bought it in all ISA/SIPP account.

Cheers,

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Re: low risk investment instead of cash waiting for investment

#187853

Postby stevensfo » December 18th, 2018, 7:57 pm

AleisterCrowley wrote:https://www.ishares.com/uk/individual/en/products/258120/ishares-ultrashort-bond-ucits-etf?switchLocale=y&siteEntryPassthrough=true#/

Not the way I read it ? Looks like TR in the range 0.6-0.9%


I'd never heard of this one before, but just had a quick look at:

https://www.ii.co.uk/etfs/ishares-ultra ... t/LSE:ERNS

The pattern over 5 years is remarkable, up and down like a yo-yo every 6 months. Now looks like a good time to buy.

Though now I've said that, the pattern is bound to change completely! :-)

Steve

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Re: low risk investment instead of cash waiting for investment

#187863

Postby AleisterCrowley » December 18th, 2018, 8:31 pm

Odd that, isn't it? Almost like something's happening every June and December, mid-month
:D

air04
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Re: low risk investment instead of cash waiting for investment

#187889

Postby air04 » December 18th, 2018, 10:32 pm

my understanding is that when dividend is paid, the price reduces by the dividend amount. And until then, dividend slowly accrues.

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Re: low risk investment instead of cash waiting for investment

#187896

Postby AleisterCrowley » December 18th, 2018, 11:19 pm

Distribution dates and amounts listed on the left in 'Performance' section of link I posted
https://www.ishares.com/uk/individual/e ... ugh=true#/
Distributions
Record Date Ex-Date Total Distribution
14/Dec/2018 13/Dec/2018 GBP 0.4013
15/Jun/2018 14/Jun/2018 GBP 0.3384
15/Dec/2017 14/Dec/2017 GBP 0.2311
16/Jun/2017 15/Jun/2017 GBP 0.2876

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Re: low risk investment instead of cash waiting for investment

#188034

Postby stevensfo » December 19th, 2018, 2:46 pm

AleisterCrowley wrote:Odd that, isn't it? Almost like something's happening every June and December, mid-month
:D


Ah, yes, I see what you mean. Obviously I was having a Homer Simpson moment there. 8-)

Though in my defence, I've never bothered with ex-div and payment dates before.

Steve

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Re: low risk investment instead of cash waiting for investment

#188069

Postby colin » December 19th, 2018, 4:27 pm

FLOS, I looked at the returns, they were very low, probably hedging has a cost.


The distributions from FLOS are linked to the US dollar Libor rate, the historical return published does not tell you much about future returns because the Libor rate was lower a year ago than it is now , as US interest rates rise I expect Libor to rise too.


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