UK gilts or US treasuries?

northbob

Grey gym sock thank you for that advice about the funds.

Coryls thank you for your input and the short duration bond fund suggestion.

Mathusian thank you for the bond question explanation.

EdGasket thank you for your points explaining reasons for caution.

EdGasket

Well enjoy your bonds. I'm only in equities, gold, and cash, no bonds.

northbob

EdGasket

I am still considering all the options, risks and implications. Any bond allocation will now be small. I also feel a small allocation to gold has a place. Cash holding with any yield in SIPP and ISA looks tricky.

Thanks again.

EdGasket

northbob; have a look at iShares ERNS fund (an ETF) which is in ultra short-dated corporate bonds. The ultra short date reduces the interest rate risk and hopefully also the risk of default on redemption. Yield is still under 1% I think but worth considering for SIPP and ISA cash. It has a very low management charge too.

northbob

EdGasket. Great suggestion. Thank you.

grey_gym_sock

ERNS could be a decent substitute for cash.

or consider IS15 (another ETF), which gets you a little more yield, in exchange for holding slightly longer duration bonds (longer, but still only about 2.5 years average maturity).

northbob

grey gym sock, thank you for that suggestion, I will look at that one too.

The shared knowledge that has come back from my original question has been amazing. Thank you.

EdGasket

The yield to maturity on IS15 is only 1.45% and the TER to take off that is 0.2% meaning the likely return at the moment is 1.25%. However you can see from the graph that, like all bonds, it has had a good run and may well be at its peak, hence a risk of capital decline. Is that risk worth it for 1.25% ?

https://www.ishares.com/uk/individual/en/products/251840/IS15

I'm not saying its any better or worse than ERNS, just that the returns on either are so small vs possible capital loss that there is little to choose between them and just plain cash earning nothing at the moment. e.g. a fall back in price of IS15 from its current price to £100 (approx inception price) would result in a loss equivalent to at least 5 year's worth of interest!

northbob

Thanks for that point.

darkidoe

Just curious. What are all your percentage cash allocations at the moment given that bonds are no good?