Rebalancing equity and bond holding

fcandmp

Looking for some expert guidance as bond investing has always appeared confusing to me when it comes to selecting funds in my SIPP and ISA With recent significant equity growth I feel I should be rebalancing towards bonds but when comparing the Vanguard offerings really not sure what I should be considering. I know there are other providers but it is the principles in fund selection that would be helpful. Vanguard list the following: Extended duration treasury (EDV); Long term Treasury (VGLT); Long term bond fund (BLV); and Long term corporate bond fund (VCLT) all pointers most welcome.

dunstonh

Currently, cash and gilts are the main risk reducers.  Investment Grade bonds are not really in favour for risk reduction at this time.   Although some bonds are viable for long term gains.   Unhedged global bonds are not desirable currently either.  
Although if you are limiting yourself to Vanguard then you probably don't want to have what may or may not be best now but just have a spread and be done with it as choosing which and how much and when are management decisions.

Albermarle

With recent significant equity growth I feel I should be rebalancing towards bonds

A lot of posters on here are expressing negative sentiment about bonds, although opinions vary as usual. Long dated ones do seem out of favour though as if interest rates were to rise from the current floor, these bond prices will get hit . 

However finding other non bond investments to balance out a portfolio is not that straightforward . As Dunstonh says cash and gilts are safe enough but with very low returns 

fcandmp

dunstonh said:

Currently, cash and gilts are the main risk reducers.  Investment Grade bonds are not really in favour for risk reduction at this time.   

Many thanks for your reply and to note I am 

Not particularly limiting to Vanguard, just started there to try to better understand the differentiation of fund products. Is it that other providers are offering substantially different types of bond fund? I am not that sophisticated an investor to currently understand nuances beyond duration and hedging 

Any suggested reading on more advanced derisking strategies for SIPP would also be appreciated 

[Deleted User]

Albermarle said:

With recent significant equity growth I feel I should be rebalancing towards bonds

A lot of posters on here are expressing negative sentiment about bonds, although opinions vary as usual. Long dated ones do seem out of favour though as if interest rates were to rise from the current floor, these bond prices will get hit . 

However finding other non bond investments to balance out a portfolio is not that straightforward . As Dunstonh says cash and gilts are safe enough but with very low returns 

The issue you are describing applies to gilts too.  If you buy them now, you are guaranteeing a loss in real terms.  Is it really “safe”? 

Cash and cash-like products or less unusual products like preferred shares and Chinese government bonds are possible alternatives. 

itwasntme001

Deleted_User said:

Albermarle said:

With recent significant equity growth I feel I should be rebalancing towards bonds

A lot of posters on here are expressing negative sentiment about bonds, although opinions vary as usual. Long dated ones do seem out of favour though as if interest rates were to rise from the current floor, these bond prices will get hit . 

However finding other non bond investments to balance out a portfolio is not that straightforward . As Dunstonh says cash and gilts are safe enough but with very low returns 

The issue you are describing applies to gilts too.  If you buy them now, you are guaranteeing a loss in real terms.  Is it really “safe”? 

Cash and cash-like products or less unusual products like preferred shares and Chinese government bonds are possible alternatives. 

You are not guaranteeing a loss in real terms if you buy bonds now because you do not know what inflation will do.  If inflation turns out to be as expected given break-evens, then you guarantee a loss if the bond is held to maturity.  Otherwise you could sell a bond in the interim and if yields fall even further you could still gain in real terms for this interim period.

[Deleted User]

itwasntme001 said:

Deleted_User said:

Albermarle said:

With recent significant equity growth I feel I should be rebalancing towards bonds

A lot of posters on here are expressing negative sentiment about bonds, although opinions vary as usual. Long dated ones do seem out of favour though as if interest rates were to rise from the current floor, these bond prices will get hit . 

However finding other non bond investments to balance out a portfolio is not that straightforward . As Dunstonh says cash and gilts are safe enough but with very low returns 

The issue you are describing applies to gilts too.  If you buy them now, you are guaranteeing a loss in real terms.  Is it really “safe”? 

Cash and cash-like products or less unusual products like preferred shares and Chinese government bonds are possible alternatives. 

You are not guaranteeing a loss in real terms if you buy bonds now because you do not know what inflation will do.  If inflation turns out to be as expected given break-evens, then you guarantee a loss if the bond is held to maturity.  Otherwise you could sell a bond in the interim and if yields fall even further you could still gain in real terms for this interim period.

True. Guarantee is too strong. But the expected return is negative.

Thrugelmir

Why not use one of Vanguards default multi asset funds. ( Or an alternative provider). Allow them to make the appropriate allocation decisions. 

Are the ETF's you listed tradeable instruments in the UK? 

JohnWinder

fcandmp said:

 really not sure what I should be considering.

It sounds like you don't hold any bonds now. So, to nit pick, does one call it re-balancing or just buying bonds as a new venture? If it's the latter, it would probably be worthwhile reading up a bit about bonds which would give some guidance as to the principles you asked about, and some reading would better place you to make something more useful of the comments which come along in a thread like this but tend to be a bit bare bones, brief and lacking an overview.

There must be some non-partisan, government funded general education information for investors about bonds; well, maybe not 'must'. There are useful books available, certainly, and you could start here: https://www.bogleheads.org/wiki/Outline_of_asset_classes#Bonds, or go here: https://www.investopedia.com/articles/bonds/08/bond-market-basics.asp

Moe_The_Bartender

Bonds are a minefield best left to the experts. Don’t meddle if you don’t know what you’re doing.

barnstar2077

In a recent PensionCraft video he showed that the longterm bonds held up better than anything else surpringly.