Hi all,to gently guide this thread back to topic,my broker is c schwab.Ive done my best to throw out a bid on every TIPS auction this year,missed the 20,and i think a 5yr.While i can only speak for this broker,has anybody noticed how hard it is to find TIPS on the secondary market?Assuming others also find this the case,i guess that says something about demand,and gauranteed,anybody posting here is a very small ameoba in the bond market.Quite some time a go i posted upcoming auctions,and will try to inform the board a few weeks before the next one.Its hot as hell here in alaska,and im feeling a bit lazy to dig out the link.good luck all--ak4195
results of 20-year TIPS auction
- Thread starter wabmester
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wabmester
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Retail bond inventory differs widely depending on your broker. I've traded bonds through Merrill, Waterhouse, Vanguard, and Schwab.
Waterhouse and Vanguard both outsource their bond trading through the same firm, but Vanguard has better spreads.
Merrill has the best inventory -- they can usually fill an order via their in-house bond desk, but they'll go out to "the street" to fill your order otherwise.
Schwab is the worst. They have poor inventory, and they don't even let you sell a bond online. You have to call their bond desk, and their spreads didn't seem competitive the one time I tried to sell through them.
For TIPS, your best bet is to go through TreasuryDirect. No mark-up. No fees. Bonds are usually sold at or below par (which makes tax accounting much easier). And you know you're getting the best market rate due to their competitive bidding process and the fact that retail investors buy at the lowest bid (like a dutch auction).
Waterhouse and Vanguard both outsource their bond trading through the same firm, but Vanguard has better spreads.
Merrill has the best inventory -- they can usually fill an order via their in-house bond desk, but they'll go out to "the street" to fill your order otherwise.
Schwab is the worst. They have poor inventory, and they don't even let you sell a bond online. You have to call their bond desk, and their spreads didn't seem competitive the one time I tried to sell through them.
For TIPS, your best bet is to go through TreasuryDirect. No mark-up. No fees. Bonds are usually sold at or below par (which makes tax accounting much easier). And you know you're getting the best market rate due to their competitive bidding process and the fact that retail investors buy at the lowest bid (like a dutch auction).
thnx for the info wab,Merrill is one of the "primary dealers" in treasury's,they along with other big house firms who make up this group HAVE TO buy the auctions.This is an aggreement with the Fed,naturally all the big houses are present.Schwab is a in minor league in this dept.By "trading",i assume you mean purchase/redeem cash settled bonds since it would be far easier to trade bond futures on the CBOT in a futures account.I think 2 out of 3 auctions ive recieved less than par.At the auctions the primary dealers job ( imho) is to bid up the auction and provide liquidity for the FED.If you look at treasury realeases after the auctions it will say something like "95% of bids were at the high of the day",then quite often next day of course price pukes it up.And of course I (schwab) payed top $.Its quite a racket.But ive had nothing but outstanding service,sometimes above and beyond the call of duty.Unfortunately this probably has more to do with sum of account balances ( i manage my moms accounts,larger than mine by a factor of 10x),than with the need to bend over backwards.So what is lost in spreads/fees on bond transactions is more than made up in "Yes sir,we can do that,no problem."There stock transactions fees recently went down by approx 1/2 ,so you give some u get some.Long ago while my dad was still alive he had a bad experience with Merrill and never looked back,instead managing his own accounts till his departure out of this world,but that story is probably best left for another thread.Good luck and dont forget to have a glass of red wine!-ak4195
