The Boring Bit of the Portfolio

pip895

I am trying to figure out what to do with the non equity part of my investments.  This part of the portfolio is there I guess, to reduce volatility, to ensure that I can take advantage of corrections when they occur and to make sure that I am never in the position of being forced to sell equity in a dip (I am retired and living off my investments). 

I wasn't very impressed with how parts of this non equity portfolio performed in the Feb/March crash.  On the 22 Feb I had 60% Equity and 40% in "other investments" these consisted of 11% cash, 5% Property, 5% HY bonds, 4% corporate bonds, 1% Guilts, 2% Global bonds, 3% gold and 9% in Absolute/flexible investments.

For obvious reasons property was not the place to be - the worst performing part of my portfolio but I have decided to hold on to these for now - not inclined to add to them however.
HY bonds acted rather like equity although slightly diluted..  Corporate bonds (mainly short duration) were similar although more cash like.  Absolute/Flexible were a mixed bag some performing well others not - I guess in the next correction different ones will under perform... 
Gold/Gilts and Global bonds were the only areas that performed relatively well not correlated with equity - but with government debt levels and yields as they are..

Now having sold most of the equity I purchased in March I have 17% sitting in cash - most of it earning nothing in interest - Where to invest it - I haven't a clue.. More gold?? am I worrying needlessly about government bonds, perhaps I don't need 40% non equity??   

Linton

What is wrong with having the money in equity - why have you sold it?  Do you need it in the short/medium term?

Sadly I dont think there are any very good non-equity options available at the moment.  The best bet ISTM is to invest broadly in what there is.  The only thing I would add to your list is are the Wealth Preservation funds:eg Capital Gearing Trust and Troy Trojan.  They wont give you any very different underlying options but will leave the job to the very experienced fund managers.  They have generally achieved their objective over many years.

pip895

I am considering that - I do have some Wealth preservation in the Absolute/Flexible section - PNL and Blackrock European Absolute Alpha for instance.  I am wondering if I should have left some of the equity in place though.

csgohan4

premium bonds are reasonable while you think where to put that cash, assuming you have not maxed it out.

Depends on how far you are retiring and if your feeling adventurous regarding equity, other wise Linton's suggestions are reasonable esp CGT. 

DiggerUK

What you are worrying about is a lot of noise due to substantial changes. It's got you like a cat on a hot tin roof. Calm down dear.

I am MSE's self appointed, unelected, unlicensed, unapproved, but undoubted expert on gold, so I'll give you my twopennerth.
Yes, gold has performed well and is now at a rich price. But if you buy now what will happen going forward (cue comments on string)
You, like Digger Mansions, are in retirement. We put all our retirement savings in gold awhile back and are very happy we did. So if you are prepared to go in to gold deeper do so cautiously.
Average in with liquid assets you can do without for at least five years +. And for christ's sake, calm down..._

m_c_s

I have a 10% of my retirement ISA in CGT and although it has 40% equity I was reassured by its relatively limited 15% drop from Feb to March lows and now it is 3% up from Feb. I think it has done its job but I have been a little uncertain about two aspects of the trust:
1.  Its 30% allocation to Index Linked Govt bonds so reliance on the potential of these to deliver capital gains.
2.  UK bias in equity with 10% of the 40% equity allocation to two FTSE 100 ETFs. Although a small allocation against the overall trust portfolio it does bring into question their equity strategy.

I plan to keep for 5 to 10 years (Its on my 5-10 year spending pot) but will evaluate again when they publish their Sep 2021 quarterly report. 

quirkydeptless

pip895 said:

IOn the 22 Feb I had 60% Equity and 40% in "other investments" these consisted of 11% cash, 5% Property, 5% HY bonds, 4% corporate bonds, 1% Guilts, 2% Global bonds, 3% gold and 9% in Absolute/flexible investments.

Guilts are bonds sold by the UK Government when they've done something really naughty 

m_c_s

Also I have noticed that CGT has increased its equity % quite a bit over the last year or so from 30 to 40%. 

ColdIron

Troy Trojan, and its IT stable-mate Personal Assets (PNL), have had a good Covid19, up 8 or 9 percent over the last 12 months, which is good for a conservatively run portfolio

enthusiasticsaver

I am not sure why you sold the equities in March as they are back up to the same level now so you have undoubtedly lost money by doing that.  If you panic each time there is market movement then investing in anything is not for you.  Holding it in cash will actually decrease in value due to the very low interest rates.  Property hasn't done brilliantly but no doubt it will recover.  

dales1

It's the opposite to selling in March, I think.

pip895 said:
Now having sold most of the equity I purchased in March I have 17% sitting in cash - most of it earning nothing in interest

I back Linton's view.