Inflation Linked Corporate Bond Fund

mr_fishbulb

I've heard/read some talk recently that time has come to get out of/reduce your holding in corporate bonds. Reasons for this is we are either approaching deflation (companies are at more risk of going bust, and yields rise), or inflation (yields on bonds will be too low to beat inflation).

Gilts have been reccomended as a replacement, but as I'm only 30 I find them a bit boring as an alternative.

However one thing I did stumble across is an Index-Linked Corporate Bond Fund from M&G. It uses inflation-linked bonds, short-term FRNs, and some inflation-linked gilts.

Although this doesn't seem to offer protection against deflation, is this fund a viable alternative to my standard M&G Corp Bond fund I hold?

Or should I even be thinking about selling my Corp Bond fund in the first place?

purch

Although this doesn't seem to offer protection against deflation, is this fund a viable alternative to my standard M&G Corp Bond fund I hold?

Certainly not.

Index Linked will leave you exposed to deflation, not protected.

http://www.bondvigilantes.co.uk/blog/

...you should probably read the blog piece by Jim Leaviss.

mr_fishbulb

purch wrote: »

Certainly not.

Index Linked will leave you exposed to deflation, not protected.

http://www.bondvigilantes.co.uk/blog/

...you should probably read the blog piece by Jim Leaviss.

Cheers for the link purch. Guess I need to decide if we'll have deflation at any time.

bendix

You're 30. What are you wasting your time with such defensive investments for? Get your a**e into growth assets like shares.

mr_fishbulb

bendix wrote: »

You're 30. What are you wasting your time with such defensive investments for? Get your a**e into growth assets like shares.

Only got into them for the growth they offered last year. Now I don't know what to do with them as not much growth potential coming up, plus the threat of inflation or deflation is a bit of a risk.

sabretoothtigger

I agree, you dont need guarantees and they are only representing expense to you. There is a small category called emerging market debt that is bought in local currencies from bric like countries

These are bonds likely to continue gaining if dollar and other western countries are unable to maintain the value of their money. I'd rate the debt of a profitable company with assets over loss making overburdened governments run by politicians who've never held down a working job or understand the use of 'profit'

Jonbvn

sabretoothtigger wrote: »

I agree, you dont need guarantees and they are only representing expense to you. There is a small category called emerging market debt that is bought in local currencies from bric like countries

A few funds I like in this category:

Investec Emerging Market Debt
Schroder ISF Emerging Markets Debt

mr_fishbulb

sabretoothtigger wrote: »

I agree, you dont need guarantees and they are only representing expense to you. There is a small category called emerging market debt that is bought in local currencies from bric like countries

Cheers A bit of research for me to do over the weekend.

Jonbvn wrote: »

A few funds I like in this category:

Investec Emerging Market Debt
Schroder ISF Emerging Markets Debt

Thanks - just had a look for the Schroder one. Can't find it on H-L unless it's this absolute return one.

mr_fishbulb

bendix wrote: »

Get your a**e into growth assets like shares.

Was thinking the other day I should probably make a move for agriculture. Been considering it for a while (whilst watching prices going up!). Already have infrastructure, water, renewable energies, natural resources and waste management, which I see as potentially large growth areas in the next few years. Maybe it is time to add agriculture.

Hmmmmmm more thinking this weekend.

Jonbvn

mr_fishbulb wrote: »

Cheers A bit of research for me to do over the weekend.


Thanks - just had a look for the Schroder one. Can't find it on H-L unless it's this absolute return one.

The Schroder one is the absolute return fund - see the link I posted.

mr_fishbulb

Jonbvn wrote: »

The Schroder one is the absolute return fund - see the link I posted.

Hahaha - I'm such a plonker today. Didn't even recognise it was a link.