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I would like to purchase real return bonds. Unfortunately TD Waterhouse discount brokerage doesn't allow real return bonds to be purchased. Has anyone had experience buying them and offer some helpful advice? For fixed income, I'm not really interested in ETF's, since the mer eats up much of the yield, especially for government bonds. Also, bonds in general seem to have large spreads. Is it possible to use limit orders to purchase bonds to avoid the spread?

Thanks.
 

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My brokerage doesn't provide RRBs either.
The only option is to buy the iShares or similar ETF.

You are right about the fees though - yields on RRBs are pathetic these days and may go underwater given the expectations of deflation.

Also, bonds in general seem to have large spreads. Is it possible to use limit orders to purchase bonds to avoid the spread?
No, there are no limit orders for bonds.
You are essentially buying from the broker and you have to buy at their ask price.
The spread is built into the offer yield that you see quoted.
 

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I would like to purchase real return bonds. Unfortunately TD Waterhouse discount brokerage doesn't allow real return bonds to be purchased.
That's news to me. Call the bond desk and ask to speak to a bond trader; he/she will be able to give you a quote on the particular RRB you would like to purchase. RRBs aren't listed in the on-line bond inventory of any of the big bank discount brokerages IIRC.

Has anyone had experience buying them and offer some helpful advice?
They are expensive and thinly traded so you have to be prepared to ante up. RRBs are "bought", they most definitely aren't "sold". They are an insurance policy against unexpected inflationary spikes.

I own the 2021's and have never added since I bought the initial tranche as I felt the premium over and above nominal bonds wasn't worth it.
 

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scomac is right, of course.

this is where the big onliners backed by diversified investment bankers that, in turn, belong to the schedule 1 chartered banks have an edge over the small discount brokers. The bigger guys have access to the investment bank's bond desk. The smaller guys don't have a bond desk.

i don't know what went wrong at tdw when the first poster contacted them. Of course the td bond desk can get these bonds for a serious buyer at tdw the discounter. They may not have any in inventory but they will go out & shop for them, if requested.

what possibly happened is that 1) the td bond desk did not have any RR bonds in inventory when the order came through, and the order was so small that bond desk declined to go out shopping, leaving the representative to make up that ludicrous excuse when speaking to his client..

i2) it's also possible that the representative was a novice who didn't understand what he was saying.

what i would do if i were hell-bent on buying RR bonds is hang with the new issues representative in my regional tdw call centre (every representative can handle new issues, but there are one or 2 who are dedicated to new issues only, and these guys tend to be the best informed.)

i'd explain that i'd like to buy a RR bond when issued & i'd ask how to keep informed. Rep might say to call in every week or so. If client is patient & determined, sooner or later the rep will probably help him find a RR bond new issue, or an existing issue that's suddenly arrived in bond desk's inventory.
 

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One of my brother's friends is a bond trader. Interesting, interesting occupation! I am also going to leave my favourite quote about the bond market here. It's from James Carville, former Clinton strategist:

I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.

I suspect what happened with the OP is that bonds are not listed on the TDW platform as a purchase option. Certainly if he was told that he cannot buy bonds through a TDW account, the rep misspoke.
 

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I suspect what happened with the OP is that bonds are not listed on the TDW platform as a purchase option. Certainly if he was told that he cannot buy bonds through a TDW account, the rep misspoke.
I think they only offer the standard stuff on their platform, and keep specialty products like RRBs and convertibles at their trading desks.
 

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actually, tdw the discounter has zero bonds itself. All bonds are coming from td securities' bond desk. This serves principally institutional clients, and also td full-service & discount clients. Strong preference given to the institutions.

what shows on the tdw discount website are mostly bond issues for which td securities has an oversupply. Occasionally one sees a small amount of something attractive. This is a leftover, too small to offer institutional clients, so it goes to the retail trade.

that's why i believe OP's best bet is to voice his interest to a knowledgeable more experienced rep such as the first issues agent - or to the PA desk if he's a PA client - and keep calling in, and sooner or later a RR bond will turn up, either as a new issue or as something newly arrived in inventory at the bond desk.

institutional & bigger clients will always be favoured, so small discount client has to be patient & persistent.
 

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what i would do if i were hell-bent on buying RR bonds is hang with the new issues representative in my regional tdw call centre (every representative can handle new issues, but there are one or 2 who are dedicated to new issues only, and these guys tend to be the best informed.)

i'd explain that i'd like to buy a RR bond when issued & i'd ask how to keep informed. Rep might say to call in every week or so. If client is patient & determined, sooner or later the rep will probably help him find a RR bond new issue, or an existing issue that's suddenly arrived in bond desk's inventory.
You will wait a long time. GoC rarely issues a new RRB -- the 2041's were the last issued several years ago. At current interest rates, it's cheaper for them to finance with nominal bonds. Furthermore, if a new RRB issue were to come out, retail would NEVER see the light of day on this as it would quickly be scooped up by institutional clients. The only way a retail investor is going to get an individual RRB is to buy it on the secondary market.

Call back TDW and ask for a bond trader. Keep going up the food chain until you get to speak to one that knows what he/she is doing with respect to RRB's. Discount brokerage CSR's are notoriously ignorant when it comes to fixed income beyond plain vanilla nominal bonds. When you do find a trader that can assist you; get their name and write it down as you will want to talk to this person again with respect to future purchases.
 

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Recent RR Issue

Actually there was an oversubscribed Issue a week or so back. Announced Aug 25 for close Aug 31, $400 mn 1.5% Dec 2044 went for 1.335% with a 46.24% allotment.

I don't see a lot of movement drooping going forward with the uncertainty out there and the incompetence of Politicians and Bureaucrats. Having said that prices have dropped 10 bp in the last week which is not bad considering short term bonds dropped 20 bp in Yield.

Personally, for now, I am sticking with my long held 2036s along with a healthy dollop in my Prec. Metals portfolio.

GLTA and DYOD

Tealeaf
 
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