Global Bonds

Rollinghome

purch wrote: »

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

Perhaps the outside chance of short term gains off a wobbly pound ahead of the elections? On the other hand the pound is still 20% down on the levels prior to the 2008 tumble. Seems limited upside, plenty of downside, and lots of costs in a UT.

pauldreed

Are Global Bonds popular, because they do not attract many comments/recomendations in the financial press.
Do they have a place in your portfolios, or are they overlooked by UK Bonds?

gozomark

Global (ex UK) bonds are, by definition, overlooked by UK bond funds.

gozomark

Why buy UK bonds ?

1. if believe interest rates likely to fall
2. diversification
3. for corporates - risk premiums likely to fall

why buy Global (ex-UK) bonds ?

all the above, plus
4. if believe £ is going to fall

for me, I don't believe any of the above currently, apart from 2. which is basically always true by definition

purch

Are Global Bonds popular, because they do not attract many comments/recomendations in the financial press

The problem (or beauty) of any sector with the name Global is that it usually contains a wide range of Funds with totally different styles, mandates and approaches.

It is hard, if not impossible to compare many of the various funds, because you will not be comparing like to like.

Sectors such as these require a lot of research so that you can identify a Fund that fits into your portfolio correctly.

slinga

Just heard the head guy at Pimco say that Bonds wouldn't yield above 3.5% for the next 5 years or so.

Of course he didn't tell anyone to pull out of bonds just be wary at the returns for a while.
He also said that bonds would be much much better than Money Market funds.

Rollinghome

slinga wrote: »

He also said that bonds would be much much better than Money Market funds.

Putting up with a lumpy mattress is better than money market funds.

artha

Rollinghome wrote: »

Over what period?

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.

Sorry if I've misunderstood the above but it begs the question why hold fixed interest funds instead of cash? I'm currently looking to increase protection of some of my high risk equity fund gains from 2009 by shifting to bond funds/distribution funds and assumed this was the way to go rather than to take the profit as cash. Any comments?

gozomark

artha wrote: »

Sorry if I've misunderstood the above but it begs the question why hold fixed interest funds instead of cash?

see my post above (number 15)