Wednesday, 18 May 2011

Two Useful Free Online Fixed Interest Investing Tools

I was hunting round the various websites yesterday trying to find new a new high yielding fund or some other way of earning a bit more interest on my money.

I remember reading on Monevator's site about Natwest Preference Shares and dipped my toe in that water in 2010. They've performed very well, yielding 9% along with a slow, but steady increase in the price of the share as financial markets have firmed up. So having found one jewel in the market I'd quite like some more of the same. But where do you find them?

A hunt around the googleverse has unearthed these two useful tools:

The Collins Stewart stockbroker site has a regularly maintained list of Preference Shares, Permanent Interest Bearing Shares (PIBS), and Enhanced Capital Notes (ECN). All of which can be purchased and traded on the stock market and held in your investment or ISA account just like a normal share.

Alternatively you can use the spreadsheet provided by Fixed Income Investments, which is similar to the above but also lists whether the item trades 'clean' or 'dirty' ie. it has the yield included in its price or not.

Just a little explanation of some of the terms involved that you might read in the spreadsheets is necessary. My understanding of the 'cum' / 'non-cum' abbreviation that appears next to most of the pref shares is this means the company is obliged to pay any pref arrears from previous years before it can pay an ordinary dividend. Of course, this doesn't necessarily apply to bank pref shares (like most things to do with the banks) and most of them have stopped their dividend payments in cum pref shares in order to build up their Tier 1 capital ratio following the credit crunch. The Natwest Pref Shares have avoided this fate, although I have no idea how - Natwest showed a massive £2.38bn loss for 2010!

I couldn't really see any mega bargains in the list at the moment (although the Royal Sun Alliance 7.3% shares may be worth a stronger look) so I just put some more money into the City Merchants High Yield Trust and hope that the experts know which fixed interest rate investments will work hardest for me.

Further Reading:

For a fairly concise roundup of what bonds are, visit and maybe subscribe to the Bond of the Week newsletter. It's a good read generally and has some good ideas for alternative investment that you might not normally come across. Of course, be aware that lots of bonds are only intended for the bond fund market as they require minimum investments of £100,000!

There is also a a nice glossary of terms used in fixed income investing at Fixed Income Terms Explained.