Fixed income portfolio

tiengomar

Hello,
I would like to know if any of the contributors to this board have a portfolio of bonds / other financial instrument which provides them with a semi secuie fixed income of
3% or a bit more. What is your portfolio and what instrument do you use?

Regards,

dunstonh

Yield has declined in popularity as an income method over the years.  Total return is increasingly the method people use.
Yielding investments typically force too much UK bias which will likely lead to lower overall returns.  Gilts and investment-grade bond yields are pants and major dividend paying equities have dividends on hold.     Many of the best dividend payers were banks and they haven't recovered from the credit crunch.   HYPs were decimated with the credit crunch.

Total return has always been around and it can lead to more tax efficiency.  It effectively means you use part of your return to fund regular withdrawals  Usually coupled with a cash account within the investment to act as a float to cover the majority of negative periods (although you can have the float outside of the investment if you prefer).

tiengomar

so basically I take it you would not put a penny into bonds to provide regular income....
what would you suggest for said regular income? ground rent funds for example? US treasury bonds if one can buy these in the UK?

AlanP_2

I think the point is that Dunston wouldn't invest for regular income. He would invest to generate an overall return that matched, or preferably exceeed, the amount the needs to be withdrawn as regular income.

Whether the total returns come from dividends, bond interest, equity capital growth or whatever doesn't matter. That seems to be the most poular method discussed on here in the current low yield world.

green_man

I have an income portfolio, but it isnt fixed income.  It pays a little over 4% currently, the income has been knocked but only very slightly. 2020 like for like income was down around 6% compared to 2019. As it happens one of the worst affected elements was the bonds portion, (which is under 20% of the total portfolio).  To get a guaranteed fixed return you would likely be looking at under 3% return if investing now.

Thrugelmir

tiengomar said:

so basically I take it you would not put a penny into bonds to provide regular income....

Inflation will progressively erode the value if you did that. In the past yields on Government Gilts used to exceed inflation.  Hence the challenge investors are finding themselves with today. 

jimjames

tiengomar said:

so basically I take it you would not put a penny into bonds to provide regular income....
what would you suggest for said regular income? ground rent funds for example? US treasury bonds if one can buy these in the UK?

Is there a reason you're not looking at the obvious place for regular income? Investment trusts that have grown their income for over 50 years despite all the market turbulence over that time period.
I think you will struggle with bonds paying 3% but it's certainly possible with ITs
https://www.ii.co.uk/analysis-commentary/investment-trust-dividend-heroes-can-ride-out-another-market-storm-21-trusts-have-raised-payouts-least-two-ii510947

tacpot12

I have a portfolio that is predominantly focused on income, but using Investment Trusts, with some bond holdings in a couple of multi-asset funds. My yield was 4% two years ago, 4.13% last year and 2.83% so far this year with four months left to run, so it might be only 3.8% this year due to the pandemic. 

tiengomar

jimjames said:

tiengomar said:

so basically I take it you would not put a penny into bonds to provide regular income....
what would you suggest for said regular income? ground rent funds for example? US treasury bonds if one can buy these in the UK?

Is there a reason you're not looking at the obvious place for regular income? Investment trusts that have grown their income for over 50 years despite all the market turbulence over that time period.
I think you will struggle with bonds paying 3% but it's certainly possible with ITs
https://www.ii.co.uk/analysis-commentary/investment-trust-dividend-heroes-can-ride-out-another-market-storm-21-trusts-have-raised-payouts-least-two-ii510947

Very much so, in fact I was looking at and researching London investment trust.
I also saw a ground rent income fund but I am cautious because of all the noise around ground rent changes due.

Linton

My 10 fund income portfolio is, according to Morningstar 50% equity, 32% bonds, 17% other, 1% cash.
The bond component:
Schroder High Yield 50%
L&G High Inocome 25%
Threadneedle EM bond 25%

The funds classified by Morningstar as  "others" are:
Princess Private Equity
GCP Infrastructure

GCP Infrastructure I think makes loans to infrastructure projects.

tiengomar

Linton said:

My 10 fund income portfolio is, according to Morningstar 50% equity, 32% bonds, 17% other, 1% cash.
The bond component:
Schroder High Yield 50%
L&G High Inocome 25%
Threadneedle EM bond 25%

The funds classified by Morningstar as  "others" are:
Princess Private Equity
GCP Infrastructure

GCP Infrastructure I think makes loans to infrastructure projects.

hi without being too nosey may I ask in percentage how much does the above income portfolio amount compared to your overall net worth?

thanks