de-risk the portfolio with the addition of fixed rate bonds

frugal90

going to try and de- risk the portfolio in the nexy year or so. Looking to put about half or so into some asset backed fixed rate bonds then will draw the income. Anybody any experience of such products - we are 100% in equities at the moment.

princeofpounds

Bonds can be volatile too, especially in an environment where we have had very low interest rates.


A lot depends on the 'duration' of the bond. That's a fancy word for saying how long the bond pays out a fixed interest rate, before the loan principal amount is repaid in full.


A bond with a long duration is more sensitive than one with a short duration. A 30 year bond will move similarly to equity, whereas a 3 month bond will be much closer to cash. It's a sliding scale.


So my main advice is be aware of the duration of the bonds you are buying (as well as the creditworthiness of the bonds and of course the currency if you are investing internationally).

masonic

Providing you are willing to hold until maturity, price volatility is not a concern for direct bond holdings.

Most of my asset backed investments have been made via P2P. I do have some indirect exposure to asset backed securities via an investment trust (TFIF) and no doubt some exposure through my core bond fund, but I don't think the opportunities in the conventional bond market are so attractive at the moment.

Albion VCT has also been mentioned as an interesting option, albeit somewhat higher risk than conventional bonds.

frugal90

What. Is Tfif May I ask?

masonic

frugal90 wrote: »

What. Is Tfif May I ask?

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