Passive Portfolio Bond Allocation

Stannis

Dear All

I hope this post finds you in good health.

I would be extremely interested in board members opinions on the following:

My passive portfolio (value approx. £100k) consists of the following.

Fidelity Index UK Fund Accumulation Acc (UK exposure) 30%
BlackRock Emerging Markets Equity Tracker (Emerging markets) 10%
Legal & General International Index Trust (Global Developed excluding UK) 20%
Cash 30%

My timeframe for keeping the funds invested is approx.15 years (when I reach retirement)

I’m contemplating adding bonds into the mix for diversification but am aware that the current environment makes it probably the worst possible time to do this.
Clearly UK Government Gilts Trackers (both long and short dated) are massively inflated by QE/Brexit, index linked Gilts are in negative yield territory and corporate bonds also overvalued.
Whilst I would prefer to stick with passive funds I am contemplating going down the strategic corporate bond fund route and am looking at Royal London Sterling Extra Yield Bond Fund.

Grateful for any views on whether any bond element to a portfolio makes sense at present. If so are passive funds a viable bond fund vehicle in the current “asset bubble” climate (as opposed an active manager who can navigate towards reasonable value)?

Thanks in advance.

ColdIron

Where's the missing 10%?

bottleandahalf

I am a bit stuck on the bond element of my portfolio too.
I was thinking of 20% in bonds -
10% in Vanguard UK short term investment grade bond and
10% in L & G global inflation linked bond index fund.

Some people suggest it's probably better holding cash at the minute though as the returns from bonds won't even beat cash now?

dunstonh

Fidelity Index UK Fund Accumulation Acc (UK exposure) 30%
BlackRock Emerging Markets Equity Tracker (Emerging markets) 10%
Legal & General International Index Trust (Global Developed excluding UK) 20%
Cash 30%

90%. Where is the other 10%

What volatility rating range are you looking for?
What model have you based your allocations on?

Clearly UK Government Gilts Trackers (both long and short dated) are massively inflated by QE/Brexit, index linked Gilts are in negative yield territory and corporate bonds also overvalued.

The current trends on professional models is a reduction in UK gilts and an increase in high yield bonds and some global high yield bonds.

bottleandahalf

dunstonh wrote: »

90%. Where is the other 10%

What volatility rating range are you looking for?
What model have you based your allocations on?



The current trends on professional models is a reduction in UK gilts and an increase in high yield bonds and some global high yield bonds.

Any suggested funds please?

dunstonh

bottleandahalf wrote: »

Any suggested funds please?

That is a regulated activity and the board does not allow such activity to take place (correctly so). Plus, we have no idea what model/strategy you are looking to follow and what volatility level you are aiming for. High yield bonds have quite a wide risk range. So, the allocations you hold in them and in the equity contents may need to be adjusted to suit the volatility rating you are aiming for.

bottleandahalf

dunstonh wrote: »

That is a regulated activity and the board does not allow such activity to take place (correctly so). Plus, we have no idea what model/strategy you are looking to follow and what volatility level you are aiming for. High yield bonds have quite a wide risk range. So, the allocations you hold in them and in the equity contents may need to be adjusted to suit the volatility rating you are aiming for.

No worries pal. I think I'll just stick to the 2 I mentioned in post 3, with 30% in cash.

Stannis

Many thanks for your responses. Apologies for the typo the Legal & General International Index Trust should have been 30%. In terms of volatility I am comfortable with medium risk. The asset allocations are loosely based on one of the Monevators model portfolio's though still is a work in progress. Just to clarify it was another poster requesting fund names.