Get bigger profits from mini bonds

In the past year we’ve seen a steady rise in quality mini-bonds, says David C Stevenson, as reputable alternative asset managers move in with asset-backed propositions.

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People are moving to improved mini-bonds
(Image credit: rclassenlayouts)

Many investors are sitting on bond portfolios or in funds where the average yield on good-quality credit is below 3% a year. These low yields might imply that they've made capital gains (bonds rise in price as yields fall), but sooner or later those bonds have to mature and the cash needs to be reinvested at horribly low yields. Thus over the past few years we've seen an explosion of retail-friendly bonds many labelled "mini-bonds" because of their diminutive size in terms of capital raised. Most of these mini-bonds have been, not to put too fine a point on it, absolute junk (ie, money loaned to risky, early-stage businesses).

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David C. Stevenson
Contributor

David Stevenson has been writing the Financial Times Adventurous Investor column for nearly 15 years and is also a regular columnist for Citywire. He writes his own widely read Adventurous Investor SubStack newsletter at davidstevenson.substack.com

David has also had a successful career as a media entrepreneur setting up the big European fintech news and event outfit www.altfi.com as well as www.etfstream.com in the asset management space. 

Before that, he was a founding partner in the Rocket Science Group, a successful corporate comms business. 

David has also written a number of books on investing, funds, ETFs, and stock picking and is currently a non-executive director on a number of stockmarket-listed funds including Gresham House Energy Storage and the Aurora Investment Trust. 

In what remains of his spare time he is a presiding justice on the Southampton magistrates bench.