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Maximize Income and Total Investment Return
We identify bonds that offer high yields relative to their risk. We also seek to maximize total returns by recommending undervalued bonds that can appreciate in value.
There are many advantages of owning individual bonds vs. bond funds, but two of the most important are locking in income for a set period of time and being able to assess the value of a bond. Corporate bonds have fixed coupons that contractually pay you coupon interest every six months. Bond fund distributions are variable, which makes it impossible for income investors to know what future income they can expect.
In addition, investors can assess the value of corporate bonds by analyzing the financials of issuing companies and comparing an issuing company's bond price, YTM, and credit spread to those of other bond issuers. Individual bond investors are further aided by individual corporate bonds trading as a percentage of their $1000 face value.
Investors cannot assess the value of a bond fund or ETF since they lack underlying financials, a fixed coupon, a maturity date, and trade off a fund's net asset value per share. Fund net asset values per share vary for each fund, which eliminates the ability for investors to apply anything in their investor tool kit to assess the value of these investments.
View our corporate bond returns page to see how our bond recommendations' performance compares to that of the world's leading corporate bond ETFs.
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Active Fixed Income Investment Strategy
To maximize total returns, we carefully monitor the prices of our recommended bonds and the financial performance of our bond issuers. We then update our buy/sell/hold recommendations through subscriber emails and quarterly webcasts.
When we believe a bond's future return is not compelling relative to other available bonds, we will typically recommend selling such bonds. We typically do not hold bonds to maturity and do not believe in bond ladders as a fixed income strategy.
Highly Selective Investment Recommendations
The over-diversification provided by large bond funds and ETFs reduces returns and is not needed by many investors.
We are partial to Warren Buffett / Charlie Munger “focus investing,” where we concentrate investments on the best opportunities. As of August 15, 2024, Bondsavvy had 68 corporate bonds on its buy/hold recommendation list, including 35 bonds we rated 'buy.'
The ability to be selective is one of the biggest advantages of individual corporate bonds vs. bond funds. Our investment analysis identifies a select number of corporate bonds we believe can achieve higher investment returns than the leading bond funds. While large bond funds will own some good bonds, the returns of these good bonds are often diluted by the lower returns of other bonds in the portfolio.
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Unbiased Investment Recommendations
Bondsavvy recommends individual corporate bonds based solely on their merits and our corporate bond research.
This is in contrast to full-service brokers that hold bonds in their own inventory and then sell you their bonds, earning them fees on the bid-ask spread plus any markup or markdown they charge investors. We charge a flat Bondsavvy subscription fee and are not incentivized by the size or frequency of subscriber transactions.
We believe this part of our fixed income strategy has been a big reason why we have achieved higher investment returns than bond funds and ETFs.
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Flexible Investment Holding Period
Our goal is to maximize the income and total return of every corporate bond we recommend. Achieving this goal can impact the length of time we recommend holding our corporate bond picks.
There can be rare cases when we have a short holding period, such as when Tiffany announced it was being acquired by LVMH. In this case, the deal announcement caused our recommended bonds to increase 25 points. To lock in our 26% investment return, we recommended selling the Tiffany bonds only four months after our initial recommendation date.
More likely, however, is that we will recommend holding our bond picks over a period of years so our subscribers can benefit from the strong income our recommendations can generate. Read our when to sell bonds blog post to learn the factors impacting when we decide to sell previously recommended bonds. You can also view our corporate bond returns page to see the holding periods of our past corporate bond recommendations.
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Empower Subscribers to Invest in Bonds Online
Bondsavvy is the leading expert for recommending individual corporate bonds to individual investors. We recommend subscribers invest in bonds online through brokerages such as Fidelity and E*TRADE to take advantage of their wide bond inventories, competitive prices, and low transaction fees.
While online brokerages have enabled individual investors to transact at prices at or near the world's largest bond funds, investors still have to select among the 9,000 individual corporate bonds available on retail brokerages. Corporate bond ratings do not advise on whether a bond is a good investment, so their value is questionable. Bondsavvy is a step up. We take the guesswork out of bond investing by providing thoroughly researched bond recommendations that have beaten the world's largest bond funds and ETFs.
Read our fixed income blog post to learn more about the benefits of investing in bonds online.
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Recommend Bonds That Can Achieve Higher After-Tax Returns Than Muni Bonds
We believe, for US investors, our after-tax corporate bond returns have outperformed municipal bond investment returns. Given the greater financial transparency provided for corporate bonds vs. municipal bonds, we believe it is easier to identify bonds that can increase in price and achieve strong total returns. Historically, the after-tax returns of our recommended bonds have often benefited from a significant portion of our returns being driven by long-term capital gains, which currently receive favorable US tax treatment compared to interest income.
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Focused Individual Corporate Bond Expertise
Steve Shaw founded Bondsavvy in 2017 after a 20-year career in corporate mergers and acquisitions and bond trading technology. For the benefit of Bondsavvy subscribers, Steve combines his deep knowledge of corporate financial analysis with a strong understanding of investing in bonds through online brokerages such as Fidelity, E*TRADE, Schwab, and others.
This corporate bond investing expertise gives Bondsavvy subscribers an edge. Our sole focus is individual corporate bonds, which enables us to identify investment opportunities most investors overlook and to mitigate risk.
