Should I move my bond fund?

Grampy_Rabbit

Hello

I would appreciate advice about what to do with my bond fund. The fund is Janus Henderson Fixed Interest Monthly Income AQ Inc (Unit Trust). It is in an ISA.

At August 2021 it was worth £28K and this has now dropped to £22K. I know the advice is that investments go up and down and to hold out, but I’m wondering if this will continue to lose value? I was thinking should I transfer it into a multi-asset fund or keep it in the bond fund and hope it will pick up again?  I do not need access to the money right now and am happy to invest it for the next 5 years or so.

Thanks for any advice

Linton

WHy did you buy the fund in the first place?  Does it still meet your requirements given that short term changes in ionvestment values are to be expected?

The fund invests mainly in very safe or reasonably safe bonds issued by major giovernments or solid companies.  38% or more is in US Government bonds and  4% or more in bonds issued by the Australian Gvernment.   So barring the end of the world as we know it the fund is not going to continue to lose money for ever.  It is losing money at the moment because interest rates are rising and so lower interest bonds issued in the past are worth less than they were.  However the higher interest given by new bonds will at some point redress the balance.

masonic

It seems to be a strategic global bond fund, which is mainly invested in high yield bonds at this point in time.

https://documents.janushenderson.com/prod/documents/docId/N9Z0GD

What was your reason for holding this particular fund compared with a multi-asset fund? Is the case still valid?

I doubt it is at the bottom quite yet, as global interest rates continue to rise. But it may bottom out in the next few months. The price may have fallen significantly, but the yield is higher now as a consequence. Unless interest rates are cut, you shouldn't expect to see a recovery per se, but the future income streams aren't affected by the price movements, and presumably you have bought a fund like this for income.

Grampy_Rabbit

Linton said:

WHy did you buy the fund in the first place?  Does it still meet your requirements given that short term changes in ionvestment values are to be expected?

The fund invests mainly in very safe or reasonably safe bonds issued by major giovernments or solid companies.  38% or more is in US Government bonds and  4% or more in bonds issued by the Australian Gvernment.   So barring the end of the world as we know it the fund is not going to continue to lose money for ever.  It is losing money at the moment because interest rates are rising and so lower interest bonds issued in the past are worth less than they were.  However the higher interest given by new bonds will at some point redress the balance.

Thanks Linton, that's helpful to know. 

To answer your question, a financial advisor suggested this fund - I opened it way back in 2000. I wanted something to invest in and that's what they suggested. I was pretty clueless about investments so went with their suggestion. Over the years I've topped it up when I can. 
I have never spent that much time thinking about it but now I'm trying to become more knowledgeable with investments and recently opened a multi-asset ISA, because after doing some research it seemed the best option. With the bond fund dropping in value, its made me question whether I should keep it there or move it elsewhere. 

Grampy_Rabbit

masonic said:

It seems to be a strategic global bond fund, which is mainly invested in high yield bonds at this point in time.

https://documents.janushenderson.com/prod/documents/docId/N9Z0GD

What was your reason for holding this particular fund compared with a multi-asset fund? Is the case still valid?

I doubt it is at the bottom quite yet, as global interest rates continue to rise. But it may bottom out in the next few months. The price may have fallen significantly, but the yield is higher now as a consequence. Unless interest rates are cut, you shouldn't expect to see a recovery per se, but the future income streams aren't affected by the price movements, and presumably you have bought a fund like this for income.

Thanks Masonic, good to know what you think it might do in the future. You might see my answer above in that I bought the fund because it was suggested to me by an IFA. Its tended to just go up gradually year by year so it suited me. 
To be honest I did not buy the fund like this for income, its what was recommended. Now its dropped in value a lot and I'm trying to educate myself about investments and make more informed decisions. Given what I've said, would you advise keeping the fund? 
Thank you

jimjames

Grampy_Rabbit said:

Linton said:

WHy did you buy the fund in the first place?  Does it still meet your requirements given that short term changes in ionvestment values are to be expected?

The fund invests mainly in very safe or reasonably safe bonds issued by major giovernments or solid companies.  38% or more is in US Government bonds and  4% or more in bonds issued by the Australian Gvernment.   So barring the end of the world as we know it the fund is not going to continue to lose money for ever.  It is losing money at the moment because interest rates are rising and so lower interest bonds issued in the past are worth less than they were.  However the higher interest given by new bonds will at some point redress the balance.

Thanks Linton, that's helpful to know. 

To answer your question, a financial advisor suggested this fund - I opened it way back in 2000. I wanted something to invest in and that's what they suggested. I was pretty clueless about investments so went with their suggestion. Over the years I've topped it up when I can. 
I have never spent that much time thinking about it but now I'm trying to become more knowledgeable with investments and recently opened a multi-asset ISA, because after doing some research it seemed the best option. With the bond fund dropping in value, its made me question whether I should keep it there or move it elsewhere. 

How does this fund fit into the rest of your portfolio? If this is your only fund and you've held for 22 years then it might not be the best to have long term as a sole investment so could be worth reviewing.

masonic

Grampy_Rabbit said:

masonic said:

It seems to be a strategic global bond fund, which is mainly invested in high yield bonds at this point in time.

https://documents.janushenderson.com/prod/documents/docId/N9Z0GD

What was your reason for holding this particular fund compared with a multi-asset fund? Is the case still valid?

I doubt it is at the bottom quite yet, as global interest rates continue to rise. But it may bottom out in the next few months. The price may have fallen significantly, but the yield is higher now as a consequence. Unless interest rates are cut, you shouldn't expect to see a recovery per se, but the future income streams aren't affected by the price movements, and presumably you have bought a fund like this for income.

Thanks Masonic, good to know what you think it might do in the future. You might see my answer above in that I bought the fund because it was suggested to me by an IFA. Its tended to just go up gradually year by year so it suited me. 
To be honest I did not buy the fund like this for income, its what was recommended. Now its dropped in value a lot and I'm trying to educate myself about investments and make more informed decisions. Given what I've said, would you advise keeping the fund? 
Thank you

I obviously can't advise you what to do, but we live in a very different world today than when you took out the investment. The barriers to investing have come right down and there are lots of options available to inexperienced investors. The typical multi-asset funds or robo-advised portfolios would include something like this as a minor component, but the main ingredients would be a balance of higher risk equities and lower risk government bonds.