VLS results over last year shows still worthwhile holding bonds

bostonerimus

We all know that comparing short term returns is dangerous. As long as we are dealing with developed markets I think you should let the “Efficient Frontier” be your guide and most people should stay away from all equities and definitely all bonds. So you won’t go far wrong with a 60/40 allocation in many circumstances.

ruperts

Aren't most of the returns from dollar denominated funds like Vanguard's down to the weakening pound rather than the performance of the bonds themselves?

itwasntme001

MaxiRobriguez wrote: »

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.

You implied bonds will be a terrible investment from saying in post #5, "risk massively outweighs reward". I was also reffering to what the OP said about why he posted - in response to those negative about bonds.



No where have i said i was overtly bullish on bonds. All i said is that there are good reasons for yields to be this low and that in my view can remain low a long time. That does not mean i am bullish, certainly not overtly bullish.


Most people are indeed here for advice, posting post after post about how a certain asset class or fund has done over such a short period does anything but provide advice. On the contrary it may cause investors to performance chase that could prove to be dangerous. There is a reason why there is a Debate subforum.



It is no good posting such advice that the OP seems to think he has done AFTER bonds have had such a strong rally.

itwasntme001

bostonerimus wrote: »

We all know that comparing short term returns is dangerous. As long as we are dealing with developed markets I think you should let the “Efficient Frontier” be your guide and most people should stay away from all equities and definitely all bonds. So you won’t go far wrong with a 60/40 allocation in many circumstances.

Agree about short term returns beign dangerous. Also agree that most people should not be all in equities and no one should ever be all in bonds. I think those that should consider being all in equities are those with at least 20 years away from retirement or those with enough income streams elsewhere to fund their lives.

Audaxer

itwasntme001 wrote: »

It is no good posting such advice that the OP seems to think he has done AFTER bonds have had such a strong rally.

I wasn't posting advice. I was just making an observation and interested in what other people thought, but I wasn't expecting rude comments about my post.

itwasntme001

Audaxer wrote: »

I wasn't posting advice. I was just making an observation and interested in what other people thought, but I wasn't expecting rude comments about my post.

Ok fine so you were starting a debate. I do not think this is a subforum to start a debate like this. You shoud have started it in the debate subforum. A heading that suggests that bonds are still worthwhile holding AFTER they have risen in value does more harm then good imo.

Linton

When celebrating the fact that your bond funds are performing well I think you are missing a key feature of bonds. When a £100 bond matures it is worth £100. It may have increased by 50% ot more in value in the mean time, but by the time it matures it must have fallen back to its original value. One doesnt buy low risk bonds because one wants this type of behavior, bonds are supposed to provide a steady safe return.


So, in my view one should steer well clear. The current behaviour of low risk bonds is all froth.

AnotherJoe

Audaxer wrote: »

I have just compared the Total Returns of the Vanguard LifeStrategy funds on Trustnet over the past year to date, and was surprised to find the best performer over that period was the VLS20 with a 9.5% Total Return compared to only 3.2% for the VLS100.

I know it is only over a year and that equities have had a bit of a hit in the last couple of days, but I am still surprised that a fund with 80% bonds has performed so well over that period. Some people have been saying for the last few years that it is waste of time holding any bonds in their portfolio, but these results seem to show it is still worthwhile including multi asset funds or bond only funds in a balanced portfolio. Do you agree? .

No. Because those results only show that it was worthwhile including multi asset funds or bond only funds in a balanced portfolio over the last year. Just that one year. They say nothing about the years before that, nor critically the next 1,2....99 years.

And, not owning a Tardis, its only the next years that we can make decisions about.

I'm sure you could also prove that it was better to hold bonds than anything managed by Neil Woodford, or that gold was a much better better than bonds. Other such results can be read in the Hindsight Times, published by So What publications.

atush

Many of us are of an age where it's dangerous to invest in equities

Speak for yourself. Many others of us, of an age, think that given a retirement of 20-30+ years that we need a certain proportion of equities to make sure we dont run out of money.

A_T

I would always hold a good proportion in long term treasury funds as they are the asset most negatively correlated to equities - that way you achieve true diversity. Gilts have been the best performing IA sector over the last 12 months.