Multi-asset fund vs own allocation

Linton

MonroeM wrote: »

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I think you are right that it is currently better to hold high interest cash than bonds.

Not so easy if your investments are, as they probably should be, held in an ISA or a Pension. Here bonds are not such a really bad idea. Yes over time they will probably generally decrease in capital value. but who knows how many equity crashes there may be in the mean time. And there are a wide range of bonds available from low risk, super-safe gilts and treasury notes, to wildly risky junk bonds. One can also choose short or long dated bonds.

MonroeM

racey wrote: »

What high interest cash options do you suggest?

The usual accounts Santander 123, Bank of Scotland, Lloyds, Tesco etc but it depends on how much you were thinking of investing in bonds I suppose. For me personally it would have been a very small amount anyway as I'm now nearly all equity apart from some property. High risk I know but I can deal with this.

MPN

MonroeM wrote: »

The usual accounts Santander 123, Bank of Scotland, Lloyds, Tesco etc but it depends on how much you were thinking of investing in bonds I suppose. For me personally it would have been a very small amount anyway as I'm now nearly all equity apart from some property. High risk I know but I can deal with this.

So basically, we all have doubts about bonds?

bigadaj

MPN wrote: »

So basically, we all have doubts about bonds?

One of the problems is that bond is probably the most Mis used and widely used terms in financial services, which is saying something.

I think the problem is that the main use of bonds in most portfolios is as lower risk and volatility instruments to complement equities. As things currently stand to get any return, or often avoid a loss, you have to utilise lower quality corporate bonds rather than say government bonds be they gilts, bunds or treasuries. Therefore if you want to sue bonds for their primary purpose you are better staying in cash, even with a real minor loss in most instances.

MPN

bigadaj wrote: »

One of the problems is that bond is probably the most Mis used and widely used terms in financial services, which is saying something.

I think the problem is that the main use of bonds in most portfolios is as lower risk and volatility instruments to complement equities. As things currently stand to get any return, or often avoid a loss, you have to utilise lower quality corporate bonds rather than say government bonds be they gilts, bunds or treasuries. Therefore if you want to sue bonds for their primary purpose you are better staying in cash, even with a real minor loss in most instances.

Totally agree.

grey_gym_sock

MPN wrote: »

Another point is I'm not sure it's great to be in bonds at all if you are financially secure. I obviously understand it diversifies your portfolio, however, if your investment is long term and you have enough cash in reserve then why bother with bonds at all?

how financially secure? for instance, i've seen it suggested that if you're only spending 1% of your capital per year, then you could reasonably go 100% shares. but few people are that secure

darkidoe

I think there's still a role for bonds even though I went with the high interest cash accounts route so far. From my understanding, bonds act like a buffer to even out the jaggered 'while noise' type volatility a bit that is the nature of equities. I think it probably helps with the investing mentality to soften any falls and also gives you are smoother ride on the investing rollar coaster. It probably makes more sense if you have a resonable amount accumulated or getting towards the decumulation phase.

bigadaj

darkidoe wrote: »

I think there's still a role for bonds even though I went with the high interest cash accounts route so far. From my understanding, bonds act like a buffer to even out the jaggered 'while noise' type volatility a bit that is the nature of equities. I think it probably helps with the investing mentality to soften any falls and also gives you are smoother ride on the investing rollar coaster. It probably makes more sense if you have a resonable amount accumulated or getting towards the decumulation phase.

Maybe but you have to view the world as it is.

Bonds are supposed to be safe and boring, but this can mean you are pretty much guaranteeing losses in both real and nominal terms. The significant increases in valuations we've experienced over the last few years can and probably will be unwound once interest rises start to rise, meaning that losses could well be significant which is the opposite of what they are supposed to do.

I still hold a small percentage in bonds, both corporate and government, but this is less than 5%, and less than my cash and premium bond holdings. I prefer the latter currently as whilst the returns aren't great you won't get a capital loss over and above inflation.

MPN

bigadaj wrote: »

Maybe but you have to view the world as it is.

Bonds are supposed to be safe and boring, but this can mean you are pretty much guaranteeing losses in both real and nominal terms. The significant increases in valuations we've experienced over the last few years can and probably will be unwound once interest rises start to rise, meaning that losses could well be significant which is the opposite of what they are supposed to do.

I still hold a small percentage in bonds, both corporate and government, but this is less than 5%, and less than my cash and premium bond holdings. I prefer the latter currently as whilst the returns aren't great you won't get a capital loss over and above inflation.

The only bonds I would consider at the moment are International/Global Corporate Bonds, Global High Yield Bonds or Strategic Bonds but it would still be a very small percentage of my portfolio.

StellaN

MPN wrote: »

The only bonds I would consider at the moment are International/Global Corporate Bonds, Global High Yield Bonds or Strategic Bonds but it would still be a very small percentage of my portfolio.

You mentioned the HSBC Global Strategy Portfolio in an earlier thread and I have been looking at the Dynamic fund in this portfolio. It seems to tick all the boxes for me because unlike the VLS & L&G funds this only has about 5% UK Equities but also holds 39% US, 14% Europe, 8.70 EM, 7.90 Pacific ex Japan and balances this with property and corporate bonds. Sounds a pretty good asset cl;!!! breakdown to me?

So basically overall it is roughly about 80/20 in Equities - any thoughts on this fund anybody compared to VLS80 & L&G Multi-Index 6 or 7?