Bonds

Thrugelmir

I'd suggest a further chat with your IFA. The world has changed in a very short period of time. Reappraising the portfolio in light of the direction of travel seems opportune. 

aroominyork

JohnWinder said:

So, to unpick that in a simplistic way that ignores the rest of the portfolio which that was part of, as well as any benefits from selling:
If that bond fund was a good buy one year ago, it ought to be viewed as a better buy today since it can be bought at a cheaper price. As well, selling (without even buying a replacement) can come with frictional losses like buy/sell spreads, broker fees, but not taxes in this case.

But times change, and just because a fund might be intrinsically ‘good’ – well managed with quality investments – doesn’t mean it suits all macro environments. Unless, that is, you think everything we can tell about the future is priced in, in which case it doesn’t really matter what you buy.

k_man

Thrugelmir said:

I'd suggest a further chat with your IFA. The world has changed in a very short period of time. Reappraising the portfolio in light of the direction of travel seems opportune. 

About that....
From the OP:

I can't ask the IFA, as he is now sacked, and under investigation

For some serious mis selling....another story!

Thrugelmir

k_man said:

Thrugelmir said:

I'd suggest a further chat with your IFA. The world has changed in a very short period of time. Reappraising the portfolio in light of the direction of travel seems opportune. 

About that....
From the OP:

I can't ask the IFA, as he is now sacked, and under investigation

For some serious mis selling....another story!

Take back control of the portfolio and simplify. Little point in just being focussed on the bonds in isolation. 

masonic

ChainsawCharlie said:

So bottom line as a conclusion to my thread folks.

Bonds whilst may not be perfect at moment, a 20% allocation  of AAA bonds for a minimum 10 year investment,  isn't going to lose me too much, but hopefully gain?

The market has priced in most of the interest rate rises likely to be seen. There is always the possibility that things will be better or worse than forecast, but at least bond yields are now in a more realistic place. If your purpose for holding them is to diversify from equities, then a global government bond fund would seem the most sensible option, bearing in mind the correlation between corporates and equities.

I do think Thrug's suggestion to start afresh with the whole portfolio has a lot of merit.

masonic

ChainsawCharlie said:

masonic said:

ChainsawCharlie said:

So bottom line as a conclusion to my thread folks.

Bonds whilst may not be perfect at moment, a 20% allocation  of AAA bonds for a minimum 10 year investment,  isn't going to lose me too much, but hopefully gain?

The market has priced in most of the interest rate rises likely to be seen. There is always the possibility that things will be better or worse than forecast, but at least bond yields are now in a more realistic place. If your purpose for holding them is to diversify from equities, then a global government bond fund would seem the most sensible option, bearing in mind the correlation between corporates and equities.

I do think Thrug's suggestion to start afresh with the whole portfolio has a lot of merit.

Many thanks.
Part of my demands against the IFA are.
1) Compensation for losses caused by his incompetence.

2) A Portfolio health check by an independent with remedial action, to put right his,  actions.

I will know better after today the final day of the 8 week grace period, after today its off to the Ombudsman.

Thanks for everyone's fine valued help here, this forum never lets me down.

It seems like you have a strong claim that any monies you stated were needed for drawdown should not have been invested in this manner, and you should be compensated for any loss after selling these. Without knowing the precise allocations for each investment you've listed, it seems likely the whole portfolio was invested above your stated risk tolerance, but that would be something to be determined.

The Financial Ombudsman Service is by all accounts very busy at the moment, so it could take many months for your case to be decided. Your need to have the portfolio looked over and corrected seems more urgent than that, and presumably you will want to do this regardless of the outcome from the FOS. If you were to go ahead and engage another adviser, the cost of their initial advice aimed at reinvesting in more suitable investments would be something you could ask to be covered in a successful FOS decision. It sounds as though your compensation could be coming from the FSCS if this current adviser is already in hot water.

tebbins

ChainsawCharlie said:

So bottom line as a conclusion to my thread folks.

Bonds whilst may not be perfect at moment, a 20% allocation  of AAA bonds for a minimum 10 year investment,  isn't going to lose me too much, but hopefully gain?

Not necessarily.
For an explainer on bonds check out the PensionCraft videos I suggested.
For example a UK government bond fund such as IGLT has still fallen 9% YTD, this is because of duration risk (see https://youtu.be/NjLOoj9a2b8 and https://www.investopedia.com/terms/d/duration.asp) and nothing to do with the credit risk.
Over 10 years, as the duration of IGLT is 11 years, you can be fairly certain of getting an average return of the YTM of 1.8% less total costs.

aroominyork

That video looks like it could have been made yesterday but it is dated Feb 2017!!!

I expect the folk at major bond houses like Vanguard and Royal London are thinking about launching a UK short duration inflation-linked gilt fund.

masonic

aroominyork said:

I expect the folk at major bond houses like Vanguard and Royal London are thinking about launching a UK short duration inflation-linked gilt fund.

I think the problem is that they can't because there are too few short dated linkers, so it would be impractical to operate such a fund. Tim Hale highlighted that there was an unmet need in an investment fund covering short dated linkers as early as 2006, yet no product materialised since.

aroominyork

masonic said:

aroominyork said:

I expect the folk at major bond houses like Vanguard and Royal London are thinking about launching a UK short duration inflation-linked gilt fund.

I think the problem is that they can't because there are too few short dated linkers, so it would be impractical to operate such a fund. Tim Hale highlighted that there was an unmet need in an investment fund covering short dated linkers as early as 2006, yet no product materialised since.

So we stick with the global option: Royal London Short Duration Global Index Linked Bond. Personally, it doesn't bother me: inflationary pressures are global, and global govt bonds are generally less volatile than equivalent UK gilts.

PS  If you are interested in buying, it fell 2.57% today. That is a lot!