Bonds or WP Funds?

Linton

quirkydeptless wrote: »

How is this different from having a portfolio that is split proportionally between equity/WP/SB ?

I find it makes managing a portfolio much easier if it just has one objective rather than 2 or more possibly incompatible objectives. Each portfolio is allocated a % of the total assets and one objective. It can then be designed to meet that one objective and appropriately focussed funds chosen without any consideration of the other objectives.

I cannot see how one can design a single portfolio to provide desired levels of growth, ongoing income and wealth preservation without splitting.

If ones needs are simple as in growing a pension pot over the long term with regular contributions then splitting may not be beneficial. But objectives are a lot more complex in retirement.

Alexland

I am guessing the Vanguard Global Aggregate Bond was from the discussion about how to replicate VLS using a 2 fund portfolio of global equity and bonds? My view is that's fine if you are trying to replicate an 80/20 split but as you go towards balanced or more conservative asset allocations having too much in traditional bonds, at current prices, is undesirable as with medium term forecasts of 1% pa growth these bonds are offering an almost 'return free risk' of interest rates rising again. So for a higher proportion of non-equity holdings it might be worth diversifying further into physical gold, property, commodities and cash (or short term bonds).

C_Mababejive

I'm no expert but isnt every thing an actual bubble or at least a growing bubble so no matter what you buy, at some point you are going to be looking at potential loss? Whether its gilts,bonds,equities,houses etc...its all a bubble fuelled by QE and low interest rates. Now either the powers that be use the levers to maintain that bubble as the new norm,ad infinitum or eventually its all going to go bang.

Wealth preservation funds..? Dont they just lend a false air of security? They surely dont guarantee to preserve wealth? if they do and also have growth then ill have some.

Further ,,arent these WP funds also inflated and full of money that people will hope is preserved when the big bang comes?

Is a market adjustment/crash/whatever anything to fear unless you need to access that money and it isnt there or you are drawing money for a pension? No it isnt. Things recover and we move on until the next one. Thats how it has always been. Has anything changed to make it any different?

C_Mababejive

seacaitch wrote: »

If that sounds too complex or unappealing then consider farming out the whole portfolio construction task to someone else by using a reputable multi-asset fund that's intended as an all-in-one portfolio and which your investigation and research suggests might be appropriate to your goals. If you do that, I'd still suggest taking a look at the fund's underlying asset allocation, rather than treating it as a black box, so you've an idea (be mentally prepared) for what might happen in a bunch of different future scenarios.

Well im probably in that boat. I read these pages with interest and try to educate myself and there is a lot of great material on here. I dont have the time or expertise to construct a portfolio, to pour over data and analysis etc so why not buy into a multi asset fund and pay someone a small fee and just keep shoving money into it?

Ive done that with HSBC Global strat balanced. Its my MA fund of choice. I also put some money into the HSBC FTSE all world index tracker to add a bit more excitement on the side. Having dome that, for someone like me, is that the only solution? Should i bung my entire investment wealth into a MA fund?

If i had an ISA containing £1m ,,should i bung it all in that one MA fund? If not,why not ?

bostonerimus

C_Mababejive wrote: »

If i had an ISA containing £1m ,,should i bung it all in that one MA fund? If not,why not ?

I can think or worse solutions, but you might also consider a portfolio of a few index funds to give similar asset allocation and save a fair bit in fees. 0.1% on a million is 1000, that might not be worth it to you, but it is a consideration particularly if you have higher costs and IFAs to pay.

Sue58

Linton wrote: »

I find it makes managing a portfolio much easier if it just has one objective rather than 2 or more possibly incompatible objectives. Each portfolio is allocated a % of the total assets and one objective. It can then be designed to meet that one objective and appropriately focussed funds chosen without any consideration of the other objectives.

I cannot see how one can design a single portfolio to provide desired levels of growth, ongoing income and wealth preservation without splitting.

If ones needs are simple as in growing a pension pot over the long term with regular contributions then splitting may not be beneficial. But objectives are a lot more complex in retirement.

Yes, I can see why you would split your portfolio into three segments for growth, income and wealth preservation. However, in my portfolio (at this stage), I do not require the income so it is just Growth and some WP therefore I feel the objective can be fulfilled in one portfolio.

Malthusian

Linton wrote: »

I cannot see how one can design a single portfolio to provide desired levels of growth, ongoing income and wealth preservation without splitting.

If you want a given level of income today then presumably you will want the same level of income say 20 years from now. That means your income-producing portfolio needs growth as well, to preserve the spending power of the income. (Ok, spending often drops in later life, but you could still be fully active 20 years from now, and that's long enough that inflation has a serious effect.)

Where wealth preservation fits into this compartmentalisation I'm not sure because if wealth is growing then it is being preserved.

Audaxer

Linton wrote: »

I find it makes managing a portfolio much easier if it just has one objective rather than 2 or more possibly incompatible objectives. Each portfolio is allocated a % of the total assets and one objective. It can then be designed to meet that one objective and appropriately focussed funds chosen without any consideration of the other objectives.

If there was an equity crash and there was a large percentage loss on your growth portfolio and no loss or a just small percentage loss on your WP portfolio, would you rebalance by selling some of the WP portfolio and reinvesting it in the growth portfolio?

bowlhead99

Audaxer wrote: »

If there was an equity crash and there was a large percentage loss on your growth portfolio and no loss or a just small percentage loss on your WP portfolio, would you rebalance by selling some of the WP portfolio and reinvesting it in the growth portfolio?

I would hope so, because 'each portfolio is allocated a % of the assets and one objective'. If it has much more than its target percentage, it should be rebalanced downwards. Likewise if the income portfolio has fallen because you keep drawing income out of it, it would need topping up with the returns from the growth portfolio.

bostonerimus

The biggest change to my portfolio in retirement has been to up the amount of cash I have in my saving account, and the rest is in a 75/25 mix of diverse index trackers. The other leg of my WP plan is my house and a rental property that are a pretty safe place for capital. My portfolio has around 2% to 3% natural yield and as I hope to be in retirement for 30 years I stay invested for growth and take a total return approach to income. I don't see the need for complications.