VLS results over last year shows still worthwhile holding bonds

itwasntme001

Audaxer wrote: »

I know that, and made the point that it was only a year. The point I was making is that bonds still appear to be useful. Many people have said there is no point of having bonds as they are having worse returns than cash. It just surprised me that the VLS20 showed such a high return, showing that bonds can have a positive effect in times of flat equity markets.

I do not find it surprising at all. We have been in a massive bull market in bonds since the 70/80s and i think returns for long duration bonds have outperformed or at least come close to matching the returns of stocks. Retirees who have capital to invest should probably not be all in stocks anyway, regardless of whether VLS20 outperformed VLS100 last year or not. I would still recommend retirees to invest close to 100% equities if they have enough income from DB pensions, annuities, state pension, rent etc to cover all their living costs. Those that would need to spend their capital probably should have a balance of stocks and bonds.

itwasntme001

MaxiRobriguez wrote: »

I don't disagree that there is the possibility that bond rally can continue, I just don't think it's the most likely case, and I also think the rally is easily broken by a small unexpected increase in inflation, or central banks reducing balance sheets.

People seem to associate bonds as a means to balance equity risk or be a safe way of getting a yield slightly above bank rates. There doesn't seem to be a real consideration that bonds can lose capital value in certain scenarios. That puts me off as well as other things.

The FED has been reducing its balance sheet for a number of years now yet yields have fallen? How do you explain that? That is right you can't. Which means why would anyone listen to your views with any reasonable level of confidence?

MaxiRobriguez

itwasntme001 wrote: »

The FED has been reducing its balance sheet for a number of years now yet yields have fallen? How do you explain that? That is right you can't. Which means why would anyone listen to your views with any reasonable level of confidence?

Sorry, you're right. I'll delete my account now.

Prism

What it tells me is that its a waste of time holding multi-asset passive funds when you could hold a few decent active ones and beat all of them

Ducks and runs for cover...

Audaxer

itwasntme001 wrote: »

I would still recommend retirees to invest close to 100% equities if they have enough income from DB pensions, annuities, state pension, rent etc to cover all their living costs.

It depends on the retiree's risk tolerance, but unlikely that many retirees would have a portfolio of 100% equities. I recall a well-respected IFA poster on here saying that none of his clients had 100% equity portfolios.

itwasntme001

Prism wrote: »

What it tells me is that its a waste of time holding multi-asset passive funds when you could hold a few decent active ones and beat all of them

Ducks and runs for cover...

What it tells me is that there are people with a lot of time on their hands analyzing markets to come up with pointless conclusions - conclusions that do not add anything whatsoever. That too on a forum that discourages performance chasing and drastic changes in investing strategy based on short term performance.

itwasntme001

Audaxer wrote: »

It depends on the retiree's risk tolerance, but unlikely that many retirees would have a portfolio of 100% equities. I recall a well-respected IFA poster on here saying that none of his clients had 100% equity portfolios.

Not only risk tolerance, and probably by far the most important factor is other sources of income. As i said, if the retiree has ample of income from other sources, why wouldn't a retiree be "all-in" in equities?

Audaxer

itwasntme001 wrote: »

What it tells me is that there are people with a lot of time on their hands analyzing markets to come up with pointless conclusions - conclusions that do not add anything whatsoever. That too on a forum that discourages performance chasing and drastic changes in investing strategy based on short term performance.

I don't know why your posts have to be so rude.

I was just making the point that bonds funds could perform well, after a lot of negative posts about bonds might have put people off holding any bond funds at all.

itwasntme001

Audaxer wrote: »

I don't know why your posts have to be so rude.

I was just making the point that bonds funds could perform well, after a lot of negative posts about bonds might have put people off holding any bond funds at all.

I was not trying to be rude. You can post whatever you like as i can, i just think its important to highlight how posts like yours as well as those posts who said bonds will be a terrible investment, are ultimately pointless and goes completely against the general advice that is given on this forum - to think long term and not to performance chase.


Posts bringing up recent performance whether positive or negative for a certain asset class does not add anything and in fact may encourage some to "performance chase".


In fact when i first read the subject of your post, it felt like something from a mainstream newspaper or trashy investment mag - just attention grabbing headline that serve no real purpose then to attract readers.

MaxiRobriguez

itwasntme001 wrote: »

You can post whatever you like as i can, i just think its important to highlight how posts like yours as well as those posts who said bonds will be a terrible investment, are ultimately pointless and goes completely against the general advice that is given on this forum - to think long term and not to performance chase.

Going to drag you up on this.

Your posts are rude, no one called bonds terrible investments, and you, if anyone, is pushing performance chasing by being so overtly bullish on bonds whilst refusing to accept that they, like any investment, come with risk.

Most people are here for a advice or a debate, not to be lectured to.