DIY portfolio: Which one bond fund to buy longterm?

[Deleted User]

edited for privacy

londoninvestor

pioruns wrote: »

Which one, single product would cover most of global bond market in this case? I've researched there is Vanguard Total International Bond ETF for US investors (with it's 0.09% OCF:happyhear), is there anything similar for us here in the UK?

iShares Core Global Aggregate Bond UCITS ETF has an OCF of 0.10%:
https://www.ishares.com/uk/individual/en/products/291771/ishares-core-global-aggregate-bond-ucits-etf-fund

(PS the closest Vanguard US equivalent to this is the "Total World Bond ETF" which also costs 0.09% and is intended to cover a global bond universe including the US. The "Total International Bond ETF" covers the world excluding the US.)

[Deleted User]

I will definitely look into this one, thanks:)

EDIT: This ETF doesn't seems to be available on iWeb?:mad:

bowlhead99

pioruns wrote: »

80% equity LS uses mainly:
.
.
.

60% LS uses even more bond funds in their portfolio.

That is because in the 60% fund they are trying to better cover the diversified bond market to give a more defensive fund. The 80% equity LS fund is taking investors who are performance driven and want only one notch in the product range below 100% equities, just using a small amount of bonds to take the edge off the wild swings of equities, so they are not so worried about downside protection and just want a simple and cheap generic bond exposure. Whereas the 60%-and-below equities funds are targeting investors who are not so gung-ho, and being more defensive are more concerned with what they buy.

I suspect Vanguard Global Bond Index Fund is a good bet here, but it has got 0.19% OCF

There is not much call for a frowny face when the cost of ownership is less than a fifth of a percent. If you are buying a two-fund portfolio, the difference between the returns of global equities and sterling-hedged bonds may be twenty times or fifty times that amount; 0.1 or 0.2% on a small part of your portfolio will get lost in the rounding.

Certainly your decision to use just one bond fund which allocates the capital based proportionately on all the bond amounts and types that exist in the world, rather than on what bond amounts and types might be suitable for your personal objectives, is a bigger issue than whether that 'one bond fund to rule them all' costs 0.1% or 0.2% or 0.3%

pioruns wrote: »

I will definitely look into this one, thanks:)

EDIT: This ETF doesn't seems to be available on iWeb?:mad:

If something isn't listed, you could always ask them if they can get it.

If not, remember that a standard approach to investing competently (or shopping generally) is to decide what you want to buy and then decide where to buy it most efficiently. No point getting :mad: that your favoured shop doesn't sell something you might like - either find somewhere that does sell it, or find something you like less and buy that instead, being braced for disappointment.

[Deleted User]

Thanks bowlhead!

Certainly your decision to use just one bond fund which allocates the capital based proportionately on all the bond amounts and types that exist in the world, rather than on what bond amounts and types might be suitable for your personal objectives, is a bigger issue than whether that 'one bond fund to rule them all' costs 0.1% or 0.2% or 0.3%

I am still getting around the idea of having bonds in this portoflio, so one-bond strategy is not set in stone, I am open to any suggestions. Would you recommend different tactic here?

There is not much call for a frowny face when the cost of ownership is less than a fifth of a percent.

Yes, I know it's a very low cost already, but nearly the same iShares Core Global Aggregate Bond UCITS ETF takes 0.10 instead of 0.19%. Why pay more if you can pay less.

Aidanmc

"I suspect Vanguard Global Bond Index Fund is a good bet here, but it has got 0.19% OCF "

Think this is 0.15%......looks to be the best your gonna get on Iweb

[Deleted User]

EDIT: Aidanmc, yes, that's what I just found out as well!

On iWeb, Vanguard Global Bond Index Fund (“Pound Sterling" Hedged Accumulation Shares) has got 0.15% OCF, same data on Vanguard page. Morningstar or other page where I checked contents of V LS, had outdated/wrong information then.
0.15% OCF is quite nice surprise now, comparing to previous assumption of 0.19%. it's available to buy, so this could be my default choice if there is no alternative.
I am yet to determine if a global bond index fund of this type, following it's Benchmark (Bloomberg Barclays Global Aggregate Float Adjusted and Scaled Index Hedged) is all I need from my bond part of the portfolio. Will have a read about it over next few days

Aidanmc

would you not consider one of the multi asset funds and have more bond types included?

bowlhead99

pioruns wrote: »

0.15% OCF is quite nice surprise now, comparing to previous assumption of 0.19%. it's available to buy, so this could be my default choice if there is no alternative.

The iShares product tracking the same Barclays Global Aggregate Bond index and GBP hedged is 0.10% but uses a less detailed sampling methodology so it holds <4,000 positions (compared to >10,000 for Vanguard); is only available as a distributing fund rather than accumulation or distribution at Vanguard; and is an ETF rather than OEIC.

I am yet to determine if a global bond index fund of this type, following it's Benchmark (Bloomberg Barclays Global Aggregate Float Adjusted and Scaled Index Hedged) is all I need from my bond part of the portfolio.

That's a personal choice, but the professionals constructing cheap multi-asset funds for sale to UK consumers (e.g. Vanguard Lifestrategy range, L&G Multi-Index range, HSBC Global Strategy range etc etc) do not just use a single bond tracker for their non-equities component.

Perhaps there is no basis for their 'more complex' allocation to use multiple bond funds to cover the different bond types other than trying to make investing sound more complicated than it needs to be so that people will buy their product rather than DIY a 2-fund portfolio.

Or perhaps it's just that before they started marketing their funds and raising billions of pounds from investors, they simply forgot to first check out the "passive 'no edge' strategy so popular nowadays on these pages."

[Deleted User]

Aidanmc wrote: »

would you not consider one of the multi asset funds and have more bond types included?

Yes, I was considering that. My preference is 90-100% equity, due to my risk appetite, age and circumstances. I was consideering Vanguard LS 100%, but I found out alternative 100% equity fund HSBC FTSE All-World Index Fund, and I will stick to this one, I need no more equity funds here.

I just need to fill the gap, for about 10% capital in bonds. I would use Vanguard LS 0% if it existed.

[Deleted User]

bowlhead99 wrote: »

The iShares product tracking the same Barclays Global Aggregate Bond index and GBP hedged is 0.10% but uses a less detailed sampling methodology so it holds <4,000 positions (compared to >10,000 for Vanguard); is only available as a distributing fund rather than accumulation or distribution at Vanguard; and is an ETF rather than OEIC.

Thanks. iShares one is not available on my iWeb, I can try to contact them as suggested, to see if that can change, but I might as well use Vanguard, with their Acc option and more-detailed distribution, I like that.

That's a personal choice, but the professionals constructing cheap multi-asset funds for sale to UK consumers (e.g. Vanguard Lifestrategy range, L&G Multi-Index range, HSBC Global Strategy range etc etc) do not just use a single bond tracker for their non-equities component.

Perhaps there is no basis for their 'more complex' allocation to use multiple bond funds to cover the different bond types other than trying to make investing sound more complicated than it needs to be so that people will buy their product rather than DIY a 2-fund portfolio.

Or perhaps it's just that before they started marketing their funds and raising billions of pounds from investors, they simply forgot to first check out the "passive 'no edge' strategy so popular nowadays on these pages."

Third option could be, that Vanguard should check up with you to validate their strategy... What if they got it wrong?:eek: :)Jokes aside, You misunderstood my intentions. I am no smarter here than Vanguard or anyone else. I am not reinventing the wheel. I simply consider from 0 to up to maybe 10% of capital to be put into bonds. Vanguard LS 0% would suit me here, if it existed. I already have equity part of the portfolio allocated on both ISA and SIPP and I am very happy with it. I might just leave it as it is, but I might as well find good bond product for my 10% capital in bonds consideration.