Corporate Bonds

drakesdrum

I see no indication of any tone in my posts.[/QUOTE]

Maybe there in lies the problem.

drakesdrum

dunstonh wrote: »

Knowing the volatility of your portfolio and making sure it matches your needs is an important part of any portfolio build. You need to concern yourself with such things.



Cost is secondary to investment selection. It is an important consideration but passives are not the answer to everything. There are some areas where passives are best. Some areas where managed is best. The M&G fund cost is not that high at all.

You are concerning yourself with differences of 0.x% a year in cost but not concerning yourself with volatility which could result in returns being +/- ten times the cost difference.



Asking you why you think something helps us understand your train of thought. I see no indication of any tone in my posts.

Perhaps the problem lies in your last sentence.

C_Mababejive

I hold the M&G strategic corp bond fund in my portfolio


In the 2 years 7 months since first investment ,its value has increased by 7.56% so typically around 3% pa. Not very exciting but relatively safe and steady i suppose.

Contrasts with one of my more recent buys which has gone up 9% in 6 months..
Artemis income Acc

Jonbvn

drakesdrum wrote: »

I see no indication of any tone in my posts.


Maybe there in lies the problem.

I think Dunstonh was giving you a perfectly straight answer without "tone".

I think you may be overly sensitive??

ikorodu

Jonbvn wrote: »

I think Dunstonh was giving you a perfectly straight answer without "tone".

I think you may be overly sensitive??

I'd disagree. I thought the original comment had a distinctly condescending tone.

I think you maybe overly insensitive??

Mistermeaner

I come here for advice and learning and find mr dunstohs input very helpful. Not here to make friends so tone is irrelevant.

Questions are valid and help shape discussion

barak

dunstonh wrote: »

.....Cost is secondary to investment selection.....

Couldn't agree more! That's why I've never bought an Index Fund. The one area where I should have is North America, where I've found it difficult to find active managers who regularly outperform the indexes.

Jonbvn

ikorodu wrote: »

I'd disagree. I thought the original comment had a distinctly condescending tone.

I think you maybe overly insensitive??

Overly insensitive?? Are you for real? Perhaps you should consider mumsnet?

bowlhead99

ColdIron wrote: »

I agree with Linton but one thing to be aware of is that, despite its name, the M&G Strategic Corporate Bond is not a strategic fund (GBP Strategic Bond) but a GBP Corporate Bond one. You might want to have a look at M&G Optimal Income which is. While there are obvious differences between the two, such as holding some sovereign debt, it is run by the same manager

It is a strategic fund. It invests strategically amongst different types of assets within the corporate bond sector. So, strategic corporate bond rather than strategic bond full stop. This can include investment grade stuff, high yield stuff, short dated stuff, long dated stuff, depending on a view of the market. Whereas a corporate index fund will be selecting those types of assets based on what proportion of the total market they make up (rather than a view of what ratio would get you through the economic cycle unscathed). From the fund manager literature:

The M&G Strategic Corporate Bond Fund is invested primarily in investment grade debt. However, up to 20% of the portfolio may be invested in higher yielding corporate bonds, government debt, convertibles and preference stocks, as well as money market instruments. The fund's exposure to corporate debt may be gained through the use of derivatives.

The investment approach is very much ‘top-down’, therefore, the fund manager’s economic outlook will determine the portfolio’s duration, and in which asset classes and sectors it is concentrated.The fund manager uses proprietary research, rather than external research. M&G’s in-house team of credit analysts provides bottom-up analysis of the corporate bond markets, which complements the fund manager’s top-down views.

The corporate bond index fund might say that 70% of the market is made up of long dated investment grade corporate bonds because they are useful for a certain kind of investor who makes up a large portion of the market. And only 10% of the market is made up of short dated bonds because fewer short dated bonds exist. And x% of the market is made up of high yield bonds because the low yields in some other corporate bonds have driven people to demand this other particular asset class at this point in time.

That asset mix may be totally inappropriate for someone who wants to navigate the current set of economic circumstances unscathed, even if it is, in some sense, a 'market view'. It is just a market view without any thought overlaid. Because there is no thought, there is very little cost. If the investor has not applied their own thought, as a substitute for paying for the thought of a professional, they may end up with a sub-optimal result and the holding might not meet their objectives.

dunstonh wrote: »

Cost is secondary to investment selection. It is an important consideration but passives are not the answer to everything. There are some areas where passives are best. Some areas where managed is best. The M&G fund cost is not that high at all.

You are concerning yourself with differences of 0.x% a year in cost but not concerning yourself with volatility which could result in returns being +/- ten times the cost difference.

This is a key thing to understand. Return is a function of what assets you hold (nearly all of what drives the performance) and management/admin cost (a small piece of what drives the performance).

If an IFA (who amongst other things, presumably constructs asset allocations for a living) asks you why you chose a particular mix of assets because it looks unusual, and the answer is you read some books by a successful American who sounded like they knew what they were talking about, and perhaps didn't read the opposing viewpoints in other people's books, and you don't really understand volatility etc, it is possible that you may not really have the best mix of assets for your circumstance. It is worth asking some questions about how you reached your conclusions.

Particularly for example if you are looking at an asset class like corporate bonds and wondering whether they are strictly necessary for a portfolio. Clearly, no asset class is 'strictly necessary' for any portfolio but it depends what you want the characteristics of the portfolio to actually be. It would be unusual to exclude them.

Asking you why you think something helps us understand your train of thought. I see no indication of any tone in my posts.

Maybe there in lies the problem.

Maybe the kindly IFA giving 50,000+ posts full of useful information and insight for you as a forum member to come and read for free, does not have time to consider whether you would prefer the practical questions which drive your discussion to its conclusions to be dressed up in fluffier language.

"Dearest Drakesdrum. Your portfolio is beautiful. However, perhaps if you could kindly give us some insight into where it came from and what the hell you are expecting it to do, we could help you nurture it to make it flower and grow more sweetly"

Freecall

Simply brilliant!

bowlhead99 wrote: »

"Dearest Drakesdrum. Your portfolio is beautiful. However, perhaps if you could kindly give us some insight into where it came from and what the hell you are expecting it to do, we could help you nurture it to make it flower and grow more sweetly"

Now for the next fluffy language challenge.

How might we respond to one of those posts that goes something along the lines of:

I have just been phoned by someone telling me that I can release my pension if I transfer it to them and invest in car parking spaces in <insert favourite third world country>. Aparently I am guaranteed a 25% return. Too good to miss?


It could add a new dimension to reading MSE.

.