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  • FIRST POST
    • cogito
    • By cogito 17th May 17, 4:43 PM
    • 2,286Posts
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    cogito
    Royal London Investment Grade Short Dated Credit Fund
    • #1
    • 17th May 17, 4:43 PM
    Royal London Investment Grade Short Dated Credit Fund 17th May 17 at 4:43 PM
    Anyone have any views on holding this fund or one similar as an alternative to holding cash in a SIPP.

    https://documents.feprecisionplus.com/Factsheet/RLAM/FS/RLINVEGSDC.pdf
Page 1
    • TrickyDicky101
    • By TrickyDicky101 17th May 17, 6:34 PM
    • 2,591 Posts
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    TrickyDicky101
    • #2
    • 17th May 17, 6:34 PM
    • #2
    • 17th May 17, 6:34 PM
    Do you have £1m to invest?
    • cogito
    • By cogito 18th May 17, 6:36 AM
    • 2,286 Posts
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    cogito
    • #3
    • 18th May 17, 6:36 AM
    • #3
    • 18th May 17, 6:36 AM
    There's always one, isn't there?

    The clue is in the words 'or one similar' of which there are a few.
    • hyperhypo
    • By hyperhypo 18th May 17, 4:11 PM
    • 42 Posts
    • 5 Thanks
    hyperhypo
    • #4
    • 18th May 17, 4:11 PM
    • #4
    • 18th May 17, 4:11 PM
    I'm asking exactly same question as OP right now , somewhere near-cash to start to create a deaccumuation fund to sell down from a sipp to fund the first two years of my retirement.

    My current choice is either a short dated UK Government bond fund (i think i can access Royal London's offering via my Aegon SIPP), or Vanguard's Global Bond fund , which is also accessible to me...or perhaps a combination of the two.

    The UK Gilt fund is < 5 years maturity and i believe the global bond fund around 8 years.

    In my case i need the certainty of having nearly £50k in near-cash to sell, in three years time, so i'm considering selling my existing 60/40 equity bond fund down to create a separate short bond fund, say £10k soon, £15k next & final year, so i'm not put in position to sell down equities in a downturn.
    Majority of my DC savings are in Vanguard LS60 currently, plus some property.

    In fact reading your post has prompted me to put my money where my mouth is and do something about it soon!
    • Malthusian
    • By Malthusian 19th May 17, 11:24 AM
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    Malthusian
    • #5
    • 19th May 17, 11:24 AM
    • #5
    • 19th May 17, 11:24 AM
    Depends what the purpose of holding the cash is. If it is for "certainty" then it's the wrong tool for the job. Short dated bonds may not be likely to fall in value as much as equities, but they can still fall. Indeed, the number of people in the industry saying you should put your money in short dated bonds to limit the downside risk of interest rate rises makes me suspect that when they do fall, they will fall by more than people think they will.

    If on the other hand you are happy to sacrifice a little certainty for a little return then it may be just the ticket.

    Hyperhypo: If you want the certainty of having £50,000 in 3 years' time but you also want the return that investing in short dated bonds gives you then you need to put £60,000 in short dated bonds - to cover the possibility that we are in the middle of a 2009 event in 3 years' time. (Or more, if you want to cover the possibility that we have a crash that is worse than 2009.)
    • cogito
    • By cogito 19th May 17, 2:23 PM
    • 2,286 Posts
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    cogito
    • #6
    • 19th May 17, 2:23 PM
    • #6
    • 19th May 17, 2:23 PM
    I'm holding a couple of years cash in my SIPP as insurance against a correction so I don't need to sell units at a bad time. My purpose in holding short dated bonds would be for much the same purpose.

    It's a fair point that bonds can fall in value significantly as they did after the GFC. The yield on some corporate bond funds went over 10% implying a default rate of 10% which has never happened. It was a great time to get in.
    • hyperhypo
    • By hyperhypo 19th May 17, 4:24 PM
    • 42 Posts
    • 5 Thanks
    hyperhypo
    • #7
    • 19th May 17, 4:24 PM
    • #7
    • 19th May 17, 4:24 PM
    @malthusian

    other than a cash buffer within a SIPP , what might be a better tool for the job?

    i make significant contributions to my DC SIPP via Salary Sacrifice, and hitherto haven't built up a cash buffer within ...which might now be prudent to put in place as OP has indicated.

    The extent of my salary sacrifice means that there's little left to put toward cash saving outside of pension, ie in higc interest account, and i suppose i was looking to avoid simply holding c. 1/4 of the target value of the SIPP in cash, hence looking at short term bonds.

    I'd looked at the same RLAM investment bond as the OP as part of my research to create a less volatile component.
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