Bond Fund for 2010 - Stick with Corp or move to Strategic?

mr_fishbulb

I've got 10% of my pension in bonds. At the moment this is fulfilled by the M&G corporate bond fund. this has done nicely over the last year, but most of what I have been reading suggests that corp bonds don't have much potential in 2010 (don't worry, I'm not expecting anything like last years gains!).

Also the M&G fund is just UK focused, which given all the talk about downgrading our rating, or the pound falling, is a little worrying.

I'm thinking about swapping the M&G corporate bond fund for a global strategic one. This will also allow for some high yield corp bonds.

What are other people's view on bond funds for 2010?

RayWolfe

Splitting my bond allocation between UK corporate and global strategic. M&G have a very good (historically) global strategic - Optimal Income.

mr_fishbulb

RayWolfe wrote: »

Splitting my bond allocation between UK corporate and global strategic. M&G have a very good (historically) global strategic - Optimal Income.

Thanks Wolf-man - do you mean this one? http://www.mandg.co.uk/Consumer/FundInfo/FundsAtoZ/OEICFunds/OptimalIncomeFund/index.jsp

Aegis

mr_fishbulb wrote: »

I've got 10% of my pension in bonds. At the moment this is fulfilled by the M&G corporate bond fund. this has done nicely over the last year, but most of what I have been reading suggests that corp bonds don't have much potential in 2010 (don't worry, I'm not expecting anything like last years gains!).

Also the M&G fund is just UK focused, which given all the talk about downgrading our rating, or the pound falling, is a little worrying.

I'm thinking about swapping the M&G corporate bond fund for a global strategic one. This will also allow for some high yield corp bonds.

What are other people's view on bond funds for 2010?

At the moment Strategic Bond funds are generally being recommended in preference to Corporate Bond funds because of the possibility they have to take advantage of other types of fixed interest asset.

They certainly seem to have a more flexible remit, and as long as you're happy with your fixed interest assets being moved between conventional gilts, index-linked gilts, investment grade and non-investment grade corporate bonds , then it might be something to consider.

Rollinghome

I'm surprised this thread hasn't had more interest. How do you feel about UT bond funds generally? Have to admit I'm not a fan. Notwithstanding the last 12 months the return has been dismal and a big reason for that seems to have been the charges within UTs. The risk premium over cash is pretty much snaffled up by the costs which leaves you with the risk but without much of a premium.

I see both those M&G funds have sort of 50/50 UK/international bonds and both are run by Richard Woolnough as is the M&G Strategic Corp Bond fund. All three seem to invest in similar grades of bonds with the main difference being that the Optimal Income fund has 6% of equities and an extra 0.25% on the AMC. Another bond fund with some equities, about 16%, is the Invesco Perp Monthly Income with an AMC 0.25% lower.

International bonds got an extra boost from fall of stirling, both got a boost from the tumbling interest rates, and both unlikely to be closely repeated. The advantageous tax treatment for interest payments over dividends within an ISA is some compensation. I'll keep a few bond funds in wifey's pf just to show I'm being prudent but that will probably be about it.

RayWolfe

mr_fishbulb wrote: »

Thanks Wolf-man - do you mean this one? http://www.mandg.co.uk/Consumer/FundInfo/FundsAtoZ/OEICFunds/OptimalIncomeFund/index.jsp

That's the jobbie. Poorish yield but best growth around, when I last looked.
... but as Rollinghome said, don't expect the same performance as last year.

I thought I might get some after April, meanwhile my global strategic is L&G Dynamic Bond - goodish growth, excellent yield.

Aegis

Rollinghome wrote: »

I'm surprised this thread hasn't had more interest. How do you feel about UT bond funds generally? Have to admit I'm not a fan. Notwithstanding the last 12 months the return has been dismal and a big reason for that seems to have been the charges within UTs. The risk premium over cash is pretty much snaffled up by the costs which leaves you with the risk but without much of a premium.

I see both those M&G funds have sort of 50/50 UK/international bonds and both are run by Richard Woolnough as is the M&G Strategic Corp Bond fund. All three seem to invest in similar grades of bonds with the main difference being that the Optimal Income fund has 6% of equities and an extra 0.25% on the AMC. Another bond fund with some equities, about 16%, is the Invesco Perp Monthly Income with an AMC 0.25% lower.

International bonds got an extra boost from fall of stirling, both got a boost from the tumbling interest rates, and both unlikely to be closely repeated. The advantageous tax treatment for interest payments over dividends within an ISA is some compensation. I'll keep a few bond funds in wifey's pf just to show I'm being prudent but that will probably be about it.

They aren't for me. I don't currently hold any fixed interest assets at all.

mr_fishbulb

Aegis wrote: »

They aren't for me. I don't currently hold any fixed interest assets at all.

I'm beginning to wonder if I need to any more. I've got 10% in my pension portfolio and 20% in my ISA. I'm not even 30.

EDIT - but then again, I think I've just got itchy fingers.

ozzage

I recently moved all of my holdings out of a combination of M&G Strategic Corporate Bond fund, Invesco Perpetual Corporate Bond fund and the SLXX ETF into the M&G Optimal Income fund. At this stage of the worldwide economy I wanted somebody else to be making my fixed interest decisions for me as it no longer seemed clear in my mind what to do.

I only bought them in mid- and late-December (in two lots) and it's gone up nearly 2.5% already so rather pleased with my timing Edit: Actually scrap that as the strategic corp. fund has done almost exactly the same so I'm not really in front or where I would have been otherwise.

I have only 5% in bonds and it's all in this fund. Perhaps not the safest idea just having one but I'm comfortable with it for now.

Totton

Invesco Perpetual are soon to launch a Tactical Bond Fund for Causer & Reed, details at trustnet.com/News/DisplayStory.aspx?id=54873

I'm moving a little more into bond funds at the moment so best not listen to anything else I have to say :-)

Best Wishes,
Mickey