Which brokerage / entity do you think is best for trading Corporate Bonds for the average investor?

Question

I'm really just looking for the brokerage company you like for this and why you like it

Answer 1

corporate bends are considered a spread product that trades on an interest rate spread over treasiuries. the reason being the credit risk associated with corporates unlike treasuries which are considered risk-free due to the backing of the full faith and credit of the u.s govt guarantee to pay interest and principal in a timely manner.
therefore, i would always watch these spreads which in general are wider the lower the credit rating of the bond issue. now, for example, corporate bond spreads are at their widest in many years due to the sub-prime mess we're in and spreads have widened tremedously. i personally think that would be a good time to buy investment grade or higher corporates ( A rating or higher).

however, i wouldn't trade any kind of bond if i were a retail investor. i would buy an investment grade diversified bond mutual fund because the professional managers are much better geared to identify value, credit risk, and interest rate risk. besides, retail usually ends up buying what we call odd-lots which are usually marked up by almost 3% even if the brokerage shows no commismission on the confirmation.

the fixed-income markets (bonds) are much bigger than the equity markets (stocks). i think the total par value of traded treasuries alone in one trading day is $500 billion. if you add all other bonds ( corporates, mortgages, munis, asset-backed) we're talking over $1 trillion a day...much higher than the value traded on the nyse and nasdaq ( don't have exact #'s on those).

in summation, now is a good time given where spreads are to invest in corporates, but i storngly encourage you to buy a professionally managed fund with not a long duration (akin to maturity)

as to the firms who trade, any big investment bank does them. but not all online brokers do. they may sell them and buy them from you, but they don't make the markets. they simply mark-up or mark-down and theu do the business with the same investment baks i referred to like goldman, merrill, morgan stanley, smith barney, deutsche bk, jpm, etc...

pimco has some great funds..vanguard group, fidelity...merrill, lehman also..they have their own index measurements which are used in the industry as benchmarks against which any bond portfolio can be evaluated.

Answer 2

Since you need $10MM to have a well diversified portfolio of corporate bonds (and tha twould be considered small), the average investor should not be trading them. His best bet is to put his money into a corporate bond mutual fund.

The bond market is for institutional investors. The best investment banks to work with are the usual suspects -- Goldman Sachs, Morgan Stanley, Lehman Brothers, etc.

Answer 3

There are quite a few ,such as Goldman Sachs,Citibank with JP Morgan there is also an excellent Company in the UK and Europe Barrington-Smith that trades Corporate Bonds.

Answer 4

I have ameritrade, they have made great strides in the area but they really do stink at it. It is still a huge hassle to buy a corporate bond from them. I really have not found a company that does a great job at that. They do do awesome at stocks and options though.

Answer 5

have you heard of the Oxford Bond Advantage program?

Answer 6

Scottrade