Fund rebalancing

FATHEROFTWO_2

Ive got a reasonably diverse portfolio and sit between the cautious and balanced/medium risk risk profile at the moment.

I have Invesco perp corp bond and M&G corp bonds amongst my bond allocation.

They are performing well but I feel they may have reached near the top of there ranges.I think it may be a good idea to move some of the funds into a high yield fund like the Investec high yld bond currently yielding 8.5 percent compared to 4.5 percent for the corp bonds .

The high yield bonds may be getting more attractive and have further to go and have a better yield.Would it be a good idea to move from the low risk corp bonds into the high yield bonds in the current market on the basis that the world economy appears to be in recovery?

Im also looking to move some of the corp bonds to top up standard life smaller companies that I have just taken out as I think the UK economy may offer more chances for growth in this fund compared to the large caps.Any thoughts on this move?

I have sufficient exposure at the moment to euro/global/asia and specialist gold oil funds at the moment so Im not concerned with this aspect of my folio.

Im just looking at rebalancing the corp bond part of it just now.

Any comments welcome

sabretoothtigger

high yield usually means higher risk hence the premium. I dont think perception is changing to favour this right now, maybe six months ago but seems to be cycling back down to me

Larger caps will have more overseas business which could be a positive hedge against a weak uk economy however smaller cap may be more dynamic.
I think it depends on the individual sectors and companies, hard to say in general but with good cashflow I would favour small cap

whiteflag_3

FATHEROFTWO wrote: »

Ive got a reasonably diverse portfolio and sit between the cautious and balanced/medium risk risk profile at the moment.

I have Invesco perp corp bond and M&G corp bonds amongst my bond allocation.

They are performing well but I feel they may have reached near the top of there ranges.I think it may be a good idea to move some of the funds into a high yield fund like the Investec high yld bond currently yielding 8.5 percent compared to 4.5 percent for the corp bonds .

The high yield bonds may be getting more attractive and have further to go and have a better yield.Would it be a good idea to move from the low risk corp bonds into the high yield bonds in the current market on the basis that the world economy appears to be in recovery?

Im also looking to move some of the corp bonds to top up standard life smaller companies that I have just taken out as I think the UK economy may offer more chances for growth in this fund compared to the large caps.Any thoughts on this move?


Im just looking at rebalancing the corp bond part of it just now.

Any comments welcome

I note you say any comments welcome-

Your not rebalancing then, you are changing the asset allocation of your portfolio.ie potentially moving from bonds to equities.

Have you ever considered just using a multi manager portfolio and letting someone else look after the asset allocation, fund manger monitoring etc?

FATHEROFTWO_2

Thanks I did Look at the jupiter merlin range but they tend to pick the Jupiter in house funds and have another layer of fees on top.The in house funds were not the best of "whole" market either.

I prefer to research my own funds but if I found a more efficient way of doing it I would do it.

BTW ....Yes you are right about the rebalancing.Im moving from a cautious to a medium risk attitude.
I started fund investing in April 2008 and I am up 9 percent overall including the credit crunch fall of october 2008.I was originally 25 percent down on my folio at one point
Im not sure how good this is but I changed the oulook of my portfolio to cautious selling all my risky funds and buying safer funds and corporate bonds.I feel now is a good time to move back out into medium risk areas

purch

The high yield bonds may be getting more attractive and have further to go and have a better yield.Would it be a good idea to move from the low risk corp bonds into the high yield bonds in the current market on the basis that the world economy appears to be in recovery?

In my opinion High Yielding Bonds (B's and lower) are currently overpriced, considering the risks that I beleive still exist in the global economy.

The spread over Government Bonds is in historical terms quite wide (175 to 225 bps in many cases) but this is more a result of the ongoing QE programs which are forcing prices of these securities higher, than a sign that Junk's are underpriced.