Global Bonds

pauldreed

Looking at the performance of my portfolio, Invesco Perpetual Global Bond Acc is my only Global Bond fund, and has not done, nor is doing well in comparison with my other investments, including my other UK Bonds.
I also see that no Global Bonds are not shortlisted in H-L's Wealth 150 list, have they fallen out of favour?

I want to keep a diversified portfolio, and a balance between bonds & equities, but should the Invesco fund go??

Charterhouse

Tough to say. I hold it as well, and I have been surprised that it's lagged competitors over the past 12 months really. Neil Woodford is a really solid manager though and I would be slightly surprised if he didn't pull the performance up a fair bit this year.

Bonds are probably slipping out of favour as people become concerned that the only way is up for bond yields and that this could hurt the performance of both Government bond and Corporate bond funds, even if Corporates continue to outperform Governments.

sunnyyorkshire

Charterhouse wrote: »

Tough to say. I hold it as well, and I have been surprised that it's lagged competitors over the past 12 months really. Neil Woodford is a really solid manager though and I would be slightly surprised if he didn't pull the performance up a fair bit this year.

I thought that this fund was managed by Paul Read, not Neil Woodford?

Charterhouse

sunnyyorkshire wrote: »

I thought that this fund was managed by Paul Read, not Neil Woodford?

Sorry, I meant the high income one not the Global Bond Fund. But the Global Bond Fund hasn't actually lagged its competitors that much at all I don't think so it doesn't leave me any less confused.

Rollinghome

pauldreed wrote: »

Looking at the performance of my portfolio, Invesco Perpetual Global Bond Acc is my only Global Bond fund, and has not done, nor is doing well in comparison with my other investments, including my other UK Bonds.
I also see that no Global Bonds are not shortlisted in H-L's Wealth 150 list, have they fallen out of favour?

I want to keep a diversified portfolio, and a balance between bonds & equities, but should the Invesco fund go??

Over what period?

Because the pound was allowed to slide the average global bond fund has outperformed stirling bond funds by a wide margin over 5 years, most of that in the last 18 months. The fund you mention has done much better than average though if you happened to buy around 12 months ago, just after it had done particularly well, you'll have seen underperformance for that period. That's often the way.

Personally, I'm no fan of bonds in UT funds because the risk premium over cash is pretty much wiped out by the charges. The only redeeming feature might be the advantagous tax position for interest payments over dividends in an ISA. Otherwise they seem oversold products and I see cash as a better reducer of risk provided it's in the better accounts.

What's happened to bonds since March has been exceptional and not the norm. The total return on the average stirling corporate bond UT fund has been 1.5% p.a. over the last 5 years. The return would have been deeply negative had it not been the 20% surge since March due to the crashing of the the bank rate to 0.5%. We're now in a position where the bank rate can only go the other way.

sunnyyorkshire

I only bought them about 6 months ago, but was looking at performance over the past 12 months, where it has acheived 4.38% total annual return, which is the lowest in my portfolio, including other UK bonds.

Rollinghome

sunnyyorkshire wrote: »

I only bought them about 6 months ago, but was looking at performance over the past 12 months, where it has acheived 4.38% total annual return, which is the lowest in my portfolio, including other UK bonds.

Yes, 12 months ago coincided with a peak which is why you get a more accurate impression by comparing graphs rather than just specific days. If you choose mid Jan instead of 7 Jan as your starting point the gain drops to about 1.5%. If you choose early Feb it goes to 12%. So not very helpful. Currency movements will mean global bonds won't always move in tandem with UK bonds.

gozomark

Its not a UK bond fund, but a global one - 2 reasons for UK bond fund to outperform a global one in the last 12 months -
1. £ was the strongest major currency in the world in 2009
2. gilt prices did well on the back of QE.

pauldreed

I am tempted to sell them, and buy into a Equity Fund instead whilst the market is doing OK.

Charterhouse

sunnyyorkshire wrote: »

I only bought them about 6 months ago, but was looking at performance over the past 12 months, where it has acheived 4.38% total annual return, which is the lowest in my portfolio, including other UK bonds.

How has it done over the past 6 months and how does it compare to the rest of your portfolio since then?

Rollinghome makes a few good points and I tend to agree that it's probably a tough time to be piling into bonds given the interest rate outlook. That said it's fairly tough to work out what you'd rather be in.

purch

Its not a UK bond fund, but a global one - 2 reasons for UK bond fund to outperform a global one in the last 12 months

Just looking at the top 10 holdings, 55% of the Fund is USD denominated.