Bond Bubble

Linton

bigadaj wrote: »

Interesting point James, might be something to make the money managers sweat.

In such a case what is the low risk alternative, presumably to be largely in cash for the final couple of years, though if this is money market then ther have been cases of volatility when investors thought it was just like a bank account.

The low risk alternative seems to me to buy gilts that mature when you want to retire. All gilts are still showing a positive yield-to-maturity so you are guaranteed to make a very small positive return. Isnt that what a sensible lifestyle scheme would do? If so I cant see where the alleged risk lies.

rpc

jamesd wrote: »

The investor probably signed up for risk reduction in the years before retirement, not specific investments.

Take a look at say FL Lifestyle Retirement 2015 AP and its short description "To provide an appropriate mix of assets for investors who wish to build capital to purchase a pension in or around the year 2015."

That appears to me to be an explicit delegation acceptance by the fund manager that they will select an appropriate mix of assets for annuity purchase at that target year.

In that scenario, perhaps there would be a problem particularly on an advised sale.

I was thinking of something more like http://www.standardlife.co.uk/1/content/resources/uk_internet/PDFs/Retail/gpen41.pdf where it is a preset list of funds that are being switched between according to a pre-programmed schedule