A reader asks which is better: the government’s low-cost retail bonds, or a listed bond ETF?
What advantage, if any, is there in investing in a local JSE-listed government bond ETF, as opposed to buying RSA retail savings bonds directly?There is actually a lot of difference and that is because buying the retail bond directly is essentially buying in the primary market. In other words, you buy directly from the government and then hold until expiry, when your capital is returned to you. Of course you also get the regular coupon payments.
A bond fund, however, buys and sells in the secondary market where bonds trade. This market is exactly like the share market, but for bonds. This means there is a risk of capital loss if the rates rise and the bond value decreases, or even just due to supply and demand, as we see in share markets. The interest rate fluctuates as the fund buys and sells bonds with different maturities and coupon rates.
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
YOUR MONEY: Retail bonds vs bond ETFsA reader asks which is better: the government’s low-cost retail bonds, or a listed bond ETF?
Read more »
YOUR MONEY: Retail bonds vs bond ETFsA reader asks which is better: the government’s low-cost retail bonds, or a listed bond ETF?
Read more »
YOUR MONEY: Retail bonds vs bond ETFsA reader asks which is better: the government’s low-cost retail bonds, or a listed bond ETF?
Read more »
YOUR MONEY: Retail bonds vs bond ETFsA reader asks which is better: the government’s low-cost retail bonds, or a listed bond ETF?
Read more »
BROKERS’ NOTES: Buy banks, sell energy stocksZwelakhe Mnguni of Benguela Global Fund Managers on what the smart money is doing.
Read more »
Memecoins surge as Ethereum optimism infects crypto marketDog-themed cryptocurrencies jumped on Monday amid broader retail-investor enthusiasm in the market, particularly as Ethereum works toward its much-anticipated software upgrade.
Read more »