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FAIR
dyfed
Posted: 17 April 2018 10:25:33(UTC)
#1

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I have been watching this for a while, but haven't bought as a) it's classified as HY Bonds which I know nothing about other than they are risky given QE unwinding and interest rate rises b) always seems too good to be true!
US and EU CLO and floating rate senior secured loans, closed-end fund, pays 14%, KID says low-ish risk, covers it's divi (with some swings and roundabouts), small premium, price down from recent highs, $ denominated but LSE listed, small spread, 3 year track record.

Thoughts?
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Tim D on 17/04/2018(UTC)
Mr Helpful
Posted: 17 April 2018 10:46:38(UTC)
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dyfed;60755 wrote:

a) it's classified as HY Bonds which I know nothing about other than they are risky given QE unwinding and interest rate rises
b) always seems too good to be true!
c) US and EU CLO and floating rate senior secured loans, closed-end fund,
d) pays 14%,
e) KID says low-ish risk
f) 3 year track record.
Thoughts?

a) HY (aka Junk = hi credit risk) generally correlated with Stocks, so usually not much of a diversifier tho floating rate (interest rate risk defence) mentioned.
b) Quite so.
c) Outwith knowledge.
d) At what risk to capital?
e) Do we rely on KID documents?
f) Too short IMHO
You can certainly turn up intriguing potential investments !!!
Good Luck

P.S. re a), for a comparator look at performance of HY 'NCYF' in 2008.
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dyfed on 17/04/2018(UTC), Tim D on 17/04/2018(UTC), dlp6666 on 18/04/2018(UTC)
Tim D
Posted: 17 April 2018 14:15:44(UTC)
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Mr Helpful;60756 wrote:
re a), for a comparator look at performance of HY 'NCYF' in 2008.


I'm looking at the chart on trustnet and the 2008 dip (~20% ?) is nothing compared to the ~80% tumble it took ~1999-2003. Also worth looking at the chart without reinvestment (because I don't believe anyone buys this sort of thing to reinvest the divis... the only sane thing is to take the money and run); that shows half the capital to be permanently lost.

And NCYF "only" yields ~7% currently, so I hate to think how much risk is lurking in FAIR for it to be yielding 14%! (I note there was an unusually big divi payment in December c.f the other monthly payments; are you sure this isn't a case of the yield figure being inflated by some "special dividend"? Not looked closely enough at other info to tell myself).

Not a holder of this sort of thing myself. It seems like a dice roll... if you get say 10 good years before the next liquidity crisis/credit crunch or whatever pretty much wipes it out, then you've won the bet. But if it happens a few years earlier you'll have lost. Do you feel lucky? (Can see it must be quite satisfying to hold this sort of thing for long enough for it to have returned an amount equal to the capital you put in though... then anything else you get out of it is gravy).
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Mr Helpful on 17/04/2018(UTC), dyfed on 17/04/2018(UTC), dlp6666 on 18/04/2018(UTC)
dyfed
Posted: 23 April 2018 18:04:30(UTC)
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What a risk-averse lot you are! Not even tempted by 18% divi from a reputable LSE-listed firm!
I decided to go with it provided I could use a stop loss to reduce capital risk.....but neither of my SIPP providers will take stop losses on FAIR for some reason....which may well b a warning in itself.
So my apologies for wasting your time!
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dlp6666 on 24/04/2018(UTC)
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