Best bonds for pension portfolio

Sony_smartphone

Currently my pension portfolio consists of . 

Aviva investors international index tracking 1acc……..29%
Janus henderson global equity 1acc …………………..22.5%
legal &general uk property feeder 1acc…………….…..12.4%
FTF Martin Currie uk managers focus W acc…………...10%
Vanguard FTSE uk All shares index unit trust GBP acc….8.5%
Abrdn Global smaller companies platform 1 acc…………10%
Fedelity International global technology w GBP acc……..7.3%

Over the years I have jigged the percentages a little and ditched a couple of funds that didn’t seem to be doing much . Generally my portfolio has performed well, it has grown by around 50k over 5 years .now that I’m thinking of dipping into it for a small bit of annual income I think I should reduce the equity funds and introduce something with less volatility. I’m just not sure on what changes I should make, should I introduce something new and if so what would be best or reallocate what I already have. Any opinions or thoughts are greatly appreciated,,,,

JohnWinder

Just to note, ‘rebalancing’ to a lot of people means altering the asset proportions back to where you want them after they’ve drifted away because the stocks boomed and the bonds didn’t or because the stocks collapsed and the bonds held their ground. A lot of people would think what you’re planning is making a strategic alteration in your asset allocation.

The right-ish asset allocation is important, as you allude to, for being the right riskiness with the right reward potential. Two good books on it are Bernstein’s and one by Ferri, but you likely don’t need to read them.

You think you need more bonds; from what we know of you, that’s sounds right. Could an advisor improve on that? Perhaps not. They might come up with a different percentage than you, which might or might not be a better choice than you make. But they might see your existing funds more clearly than you see them; I think the essence of it is how much of your current mix is stocks and how much is in bonds. You can probably nut that out yourself, and then add a bond fund to get the percentage of high risk (stocks, real estate etc) assets and low risk assets (safe bonds, cash) where it suits you.

If that really is the essence of sound investing, then the appeal of the multi-asset funds like the VLS series is obvious - it makes your portfolio simple and transparent. But I’m not suggesting changing from your existing to that type of product. 

Final point is: be careful ‘jiggling’ assets and ‘ditching’ funds. Tinkering can lead to worse results than not tinkering. Read the ‘mind the gap’ research from Morningstar to see if it applies to you.

Sony_smartphone

JohnWinder said:

Just to note, ‘rebalancing’ to a lot of people means altering the asset proportions back to where you want them after they’ve drifted away because the stocks boomed and the bonds didn’t or because the stocks collapsed and the bonds held their ground. A lot of people would think what you’re planning is making a strategic alteration in your asset allocation.

The right-ish asset allocation is important, as you allude to, for being the right riskiness with the right reward potential. Two good books on it are Bernstein’s and one by Ferri, but you likely don’t need to read them.

You think you need more bonds; from what we know of you, that’s sounds right. Could an advisor improve on that? Perhaps not. They might come up with a different percentage than you, which might or might not be a better choice than you make. But they might see your existing funds more clearly than you see them; I think the essence of it is how much of your current mix is stocks and how much is in bonds. You can probably nut that out yourself, and then add a bond fund to get the percentage of high risk (stocks, real estate etc) assets and low risk assets (safe bonds, cash) where it suits you.

If that really is the essence of sound investing, then the appeal of the multi-asset funds like the VLS series is obvious - it makes your portfolio simple and transparent. But I’m not suggesting changing from your existing to that type of product. 

Final point is: be careful ‘jiggling’ assets and ‘ditching’ funds. Tinkering can lead to worse results than not tinkering. Read the ‘mind the gap’ research from Morningstar to see if it applies to you.

Thank you so much for your well made points. I will do some more research on all the points raised. Once again this MSE forum has proved a goldmine of information. Thank you all for your input , it has been invaluable….