Vanguard LS60 risks ?

Thrugelmir

lvader wrote: »

In the event of a proper gilt sell-off (like what happened in Greece for example) your capital will be at risk regardless of the fund.

Providing the UK Government honours the debt and pays the coupon. The amount to redemption remains unchanged. Irrespective of market price movements which only impact you if you trade the stock.

If a Government is on the verge of defaulting then the whole economy / financial system is in trouble. Given the UK's reliance on earnings from the financial services and legal sectors this is somewhat unlikely.

lvader

Thrugelmir wrote: »

Providing the UK Government honours the debt and pays the coupon. The amount to redemption remains unchanged. Irrespective of market price movements which only impact you if you trade the stock.

If a Government is on the verge of defaulting then the whole economy / financial system is in trouble. Given the UK's reliance on earnings from the financial services and legal sectors this is somewhat unlikely.

I googled short dated gilt funds. The 1st one that came up shows gains of close to 20% in some 12 month periods. If a fund like this can go up 20% it can go down by a similar amount.

https://investorhub.financialexpress.net/documents/royallondon/en-gb/JPBT/FS

You can see a 10% drop in 2016.

[Deleted User]

lvader wrote: »

I googled short dated gilt funds. The 1st one that came up shows gains of close to 20% in some 12 month periods. If a fund like this can go up 20% it can go down by a similar amount.

https://investorhub.financialexpress.net/documents/royallondon/en-gb/JPBT/FS

You can see a 10% drop in 2016.

Looked at your reference and didn’t see that fund going up by 20%. Are you sure? That would be unimaginable for short term government bonds.

The only two cases when a government is likely to default is when:

A) it borrowed in a different currency (not the case with Brits buying gilts) or
it lost control of its currency, e.g by pegging to a USD, using another country’s currency or the euro scenario (e g Greece)

Otherwise the government can always print more money to pay you back. And it will.

Thrugelmir

lvader wrote: »

I googled short dated gilt funds. The 1st one that came up shows gains of close to 20% in some 12 month periods. If a fund like this can go up 20% it can go down by a similar amount.

Prices do go up and down. A the end of the day you'll still own a gilt with a nominal value of £100 (or multiple there of) paying a fixed coupon rate of interest.

On the 13th August the DMO at auction offered 1.75% 2029. Average auction price was £114.989 per £100 of nominal stock. Yield to maturity was 1.148%.

Doesn't matter what happens to the market price in the intervening period (as that's only paper gain/loss). As over the next 30 years you'll receive a gross payment of 87.5p every six months plus a lump sum of £100 in 2049.

You need to learn to distinguish the wood from the trees. The bull markets in bonds is over past 40 years). High coupon yields are gone. New gilts issued are low yielding.

There's a false market in Gilts as the BOE maintains it's QE position of £435 billion. As gilts mature it buys irrespective of price. Also holds some £9 billion of blue chip corporate bonds under the same scheme which has reduced liquidity in this market.

0779mike

Is there a good (safe) P2P iinvestment that is available via iWeb ?

beamyup

0779mike wrote: »

Is there a good (safe) P2P iinvestment that is available via iWeb ?

Thats a bit random. Please start a new thread if you have a completely unrelated question.

0779mike

jamesd wrote: »

How about proving it yourself with a little experiment? Have equities and bonds fall at 25% and 5% for two consecutive months. Then recover at 10% and 2% a month for six months. For 60:40 and 40:60 mixtures.

If you want to follow Guyton's thoughts and like 60 normally, 40 would be a better choice now, moving back into 60 when the cyclically adjusted P/E goes sufficiently lower.

No fund that contains significant equity holdings is a good choice for selling when equities are down because you're selling low. It's where pure fixed interest things belong: bonds, cash and perhaps some P2P.

Can anyone suggest robust P2P investments that might be available through iWeb ?

....and what are the downsides to P2P investment ?

jamesd

I doubt that any useful P2P is available through iWeb. I quite like and use Ablrate and Unbolted via their flexible ISAs.

Like all investments there's risk and no FSCS protection for P2P.

bowlhead99

jamesd wrote: »

I doubt that any useful P2P is available through iWeb. I quite like and use Ablrate and Unbolted via their flexible ISAs.

Agreed, IWeb are not a p2p lending firm, and so they are not going to be able to hook you up with an individual or SME borrower who wants you to lend them money inside a SIPP environment somehow.

As a stockbroker, IWeb would be able to let you buy and hold an investment in an investment trust which in turn has exposure to P2P marketplace loans and other 'non-bank' loan originators.

Most professional/institutional investors (such as investment trusts) would look more broadly than mainstream P2P platforms for opportunities, given the UK P2P lending marketplace is only a few billion out of the few trillion total lending in the UK (i.e. stuff that's not P2P is a thousand times the market of P2P). So there are entities such as P2P Global Investments plc which have started out investing in the global p2p space and diversified into other sources of loan origination and structured finance (especially since a change of manager a couple of years back). The current investment manager of P2P GI also manages Honeycomb Investment Trust; both hold structured loans and whole loans in multiple sectors.

I mention those not as particular recommendations but just that they are relatively large investment trusts with some exposure to the types of loans (or types of borrower) you get through P2P. They have both been held by Woodford, so attracting some media commentary recently - based on articles, I think he exited P2P GI but still has a large holding in Honeycomb which some would see as an 'overhang' depending on if or how he disposes of some of it as he trims his portfolio, which could hit the current price premium over NAV.

Yes I'd agree with others that this is off-topic for a Vanguard LS60 thread and it would make sense for OP to create a separate thread if he wants to explore it - most people won't look inside a Vanguard thread to chat about p2p exposure.