Vanguard Direct site - which fund in case of stock market crash?

Alexland

ValiantSon wrote: »

Well, initially I was correcting an implicit error that you made by suggesting that LifeStrategy funds were full of corporate bonds and that you would be better with government bonds, so my point still stands.

Vanguard have a nice chart showing both government and corporate bond returns. Unexpectedly when equities took a dip in mid 2014 to mid 2015 corporate bonds seemed to do better than government bonds.

https://www.vanguardinvestor.co.uk/articles/latest-thoughts/markets-economy/chart-all-bonds-not-equal



See correction in posts below - the equities dip was mid 2015 to mid 2016

Alex.

username12345678

Are you sure that's what that chart is saying?

Alexland

username12345678 wrote: »

Are you sure that's what that chart is saying?

I was surprised too. However corporate bonds seem to have fared worse in the short period after mid 2015.

A_T

The equity dip started mid 2015. By no stretch of the imagination was it a crash though. UK Gilt funds did better during that period that GBP Corporate Bond funds.

Alexland

A_T wrote: »

The equity dip started mid 2015. By no stretch of the imagination was it a crash though. UK Gilt funds did better during that period that GBP Corporate Bond funds.

Well that explains it - my recollection of the equity dip was 1 year out (should have checked the dates) in which case from mid 2015 corporate bonds did take a slightly bigger dip than government bonds at the same time as the equity dip which is what we would expect to see.

pip895

It seemed to me a perfectly reasonable for your view of the market phase to influence your risk tolerance. So if you feel stocks are overvalued after significant gains swapping for instance from VLS80 into VLS60 would be reasonable.

When a market correction occurs - say 30% then you swap back to VLS80. You can't know of course that the market won't drop another 10% -20% but the chances are that you will be better off than sticking to the lower risk fund overall. Ther is no guarantee - but at least a better than even chance that using this strategy you could be better of than sticking with the more agressive fund. At the very least you have dialled down your risk.

I follow this sort of strategy although not using the VLS funds - I am in cautious mode at the moment but holding my 40% in a mixture of cash, market nutral/absolute return and strategic bonds. The policy hasn't realy been tested by a big fall as yet though I have taken advantage of a few of the smaller corrections. Of course I may bottle it and bury my head in the sand when the big crash comes but if I do then that will just tell me I'm more a VLS60 than a VLS80 sort of investor lol.:rotfl:

ValiantSon

A_T wrote: »

You inferred. It wasn't implicit.

No, it really was implied.

A_T wrote: »

If there is an equity crash it's almost certain corporate bonds will too. Treasuries will go up.

"Almost certain". Interesting assessment of probability. Corporate bonds may fall if equities do, but they may not. You don't know, and neither do I. The causes of the fall in equities is as important as the fact that they are falling, as to how bond markets will respond. Your analysis is extremely simplistic.

A_T wrote: »

And you're right you can't help me.

Nice talking with you.

chockydavid1983

Is there a single global bond fund that has a good mix of corporate/ government bonds? I can't seem to find this out for Vanguard Global Bond Index on the fund info page:
https://www.vanguardinvestor.co.uk/investments/vanguard-global-bond-index-fund-pound-sterling-hedged-income-shares

ValiantSon

chockydavid1983 wrote: »

Is there a single global bond fund that has a good mix of corporate/ government bonds? I can't seem to find this out for Vanguard Global Bond Index on the fund info page:
https://www.vanguardinvestor.co.uk/investments/vanguard-global-bond-index-fund-pound-sterling-hedged-income-shares

It depends what you think a good mix is.

The page shows you thedistribution by issuer of bonds in the fund. Is this not what you are looking for?

chockydavid1983

Thanks ValiantSon, I was looking for a break down of country and bond type ideally. I've found country here:
https://www.brewin.co.uk/financial-advisers/insight-for-advisers/fund-focus-vanguard-global-bond-index-fund
Though I'm not sure what Supranational means. Are these funds likely to include bonds in emerging markets if that's a thing?