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Bond funds query
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Beddie said:aroominyork said:Beddie said:They will not give much in the way of returns, due to the interest rate increases we are seeing, but have already fallen a long way as you can see.
(Aged: bonds are complex to understand. It will take time and effort to work them out. But you are not alone: a fund which tracks the world's bond market, eg Vanguard Global Bond Index fund, has fallen 6% over the last five years after having been 10% up at the beginning of 2022.)1 -
If you were due to invest a lump sum now would it be wise to invest in a bond fund whilst unit prices are low or does it not work like “equity funds” where you have the potential of a recovery at some point.0
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Jacklob said:If you were due to invest a lump sum now would it be wise to invest in a bond fund whilst unit prices are low or does it not work like “equity funds” where you have the potential of a recovery at some point.
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On that basis nobody should be now investing in bond funds and those who are already in should get out? I have just had a pension transferred and have already invested in the equity funds recommended in my portfolio via and IFA and have held back on investing in the two bond funds recommended, Legal and general sterling corporate bond fund and the vanguard corporate bond index fund. Accounting for £130,000. Now I don’t know what to do??? The IFA has made his recommendation and therefore is sticking to it, I am not so sure.0
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Jacklob said:On that basis nobody should be now investing in bond funds and those who are already in should get out? I have just had a pension transferred and have already invested in the equity funds recommended in my portfolio via and IFA and have held back on investing in the two bond funds recommended, Legal and general sterling corporate bond fund and the vanguard corporate bond index fund. Accounting for £130,000. Now I don’t know what to do??? The IFA has made his recommendation and therefore is sticking to it, I am not so sure.
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Thanks, I think I,ve read too much about a potential “bond market collapse”, that I lost my nerve. I think I will wait another month then drip feed in over the next 6 months. Thanks again.0
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Aged said:Jacklob said:... does it not work like “equity funds” where you have the potential of a recovery at some point.
PS And as I wrote in the other thread, you can buy individual gilts which mature in the next few years and pay c.4.5% yield to maturity (which is the equivalent of a saving accounts APR). You might find savings accounts you prefer, but for money held in SIPPs and S&S ISAs those are worth considering instead of a bond fund.1 -
It depends on the bonds. Lower rated corporate bonds e.g., lower grade investment bonds - 'BBB' credit rating - and high yield/junk bonds - 'BB' and below - have higher yields and tend to trade more like equities so can sell-off hard in a nervous market and can rally strongly if the worries turn out to be overblown. Geographies matter, too. Emerging market bonds, corporate and government, will usually trade at higher yields and with more volatility than developed market bonds.2
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wmb194 said:It depends on the bonds. Lower rated corporate bonds e.g., lower grade investment bonds - 'BBB' credit rating - and high yield/junk bonds - 'BB' and below - have higher yields and tend to trade more like equities so can sell-off hard in a nervous market and can rally strongly if the worries turn out to be overblown. Geographies matter, too. Emerging market bonds, corporate and government, will usually trade at higher yields and with more volatility than developed market bonds.1
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