Bond ETF Divergence from FTSE All Share

kidmugsy

marathonic wrote: »

Because cash will be guaranteed to lose to inflation every year.

Objections
(i) Oh no it isn't: the cash ISAs we opened a few years ago are handsomely beating inflation.
(ii) Shares are guaranteed to lose to inflation in some years - of course, you don't know which.

But your main problem is that you are talking as if allocation to cash or bonds is static. Nobody seriously recommends that. The point is to rebalance e.g. yearly. What you need to do is go and read up on the "Efficient Investment Frontier".

racing_blue

Does anyone else think fixed rate cash ISAs present an attractive alternative to bonds for small private investors in the present low interest rate world?

-Bonds are likely to drop in value when interest rates rise, and cash is not.

-Cash ISAs, as I understand it, can be transferred to S&S ISAs and used to buy bonds or bonds funds in the future.