How long to give funds to recover?

DannyCarey

Bonds are the last thing I would buy right now.

aroominyork

Linton said:

One cannot predict the future but in my view any fund with a high % of bonds is likely to only recover slowly.  The reason is that bonds bought more than a year of so would have been priced on the basis of a very low interest rate.  Over time these will be replaced by bonds with higher interest rates and bonds as an asset class will return to its former role as a safe diversifier to equity.  But this process will take several years.

On the other hand one can argue that the major falls have already taken place and that further significant falls could be unlikely.

So what to do?  If your time scale really is 4 years and the money matters then I would put it into a higher interest fixed term cash account.  I think it would be foolish is to take on higher investment risk to recoup your losses quickly - in 4 years it's a gamble.  You could win or you could lose.

I think Linton is correct. The yields from bond funds over the coming years will play out a reverse scenario from the one of the past decade where returns were high due to the starting yields of bonds bought before the 2008 crisis. This is explained in this Occam article under the section headed " Was the bond bull market caused by falling interest rates?".

MarcoM said:

Would treasury gilts such as TN26 be useful to OP?

OP says the money is in an S&S ISA so, if she wants to keep it there (rather than unwrap it and use a savings account) it is worth considering a short-dated gilt that matures when she needs to access the cash. I suggest reading this thread from the last few days https://forums.moneysavingexpert.com/discussion/6390661/buying-an-individual-gilt-question/p1. (I do not think TN26 exists. Maybe Marco means T26 maturing 31/1/26 which at the current price of 87.37 returns a YTM of 4.23%.)

JohnWinder

I picked the RL funds because the info specifically said it was suitable for a five year time frame,

None of us has said we've looked at your funds to see what they're made of. And I added to my 'criticism' the caveat 'if that describes your (investment) situation'. Quite possibly, those funds are suitable for 5 year time-frames; if you've only had them for a year it might be doing them an injustice to condemn them at this stage. If it was of interest enough, one could look at a long history of such funds and see how many bad 5 year periods there were. There's me banging on about historical charts again.

Albermarle

I bought two Royal london funds ( 50% bonds and 70% bonds) a year ago in my S&S ISA,  

I think from the OP's previous posts the first one is this one, as I have this myself.

Sustainable Diversified Trust PDF Factsheet (fundslibrary.co.uk)

Although I reduced my bondholdings generally I kept this fund, as it is actually 60% equities, and had performed better in the past than a typical multi asset 60/40 fund.

It is down 14.5% in the last 12 months - with an average return over the last 5 years of 4.5% pa.

I think the problem is that the 40% bond element is all UK.

Personally I am going to hang on to it on the hope that it has 'bottomed out', and it is only a few % of my portfolio.

Not sure I would hang on to the 70% bond fund though.

NannaH

Strange,  I’ve had mine exactly a year and it’s down 19.4% today. 

The other is the managed growth fund (64.5% bonds ) and it’s down 20.7%. 

So they’ve risen very slightly in the last day or two. 

Albermarle

Royal London Sustainable Diversified Trust C Inc Fund factsheet | Trustnet

I checked via Trustnet . 14.5% down in one year.

Maybe it is a different investment, there are a few RL investments that sound similar.

NannaH

It’s the C Acc. Fund, on my HL dashboard it says -19.39% .  Perhaps I’ve had it a bit longer than a year then. 

Albermarle

NannaH said:

It’s the C Acc. Fund, on my HL dashboard it says -19.39% .  Perhaps I’ve had it a bit longer than a year then. 

I sent the INC fund my mistake, but as it includes income reinvested, the end result is the same.
If you look at the graph and measure it from 13 months ago the drop is about 19%.

NannaH

On FT, it says down 20.94%

I’ve worked it out from the cost price and I’m down 20%.

For my other one I have the inc version of D class managed growth fund so am getting dividend pay outs, which reduce the losses a bit.