Global Bond Index Fund

MarcoM

Hi,

Is anyone invested in the Vanguard Gloabl Bond Index for income purposes?
I am struggling to find info on the dividen percentage performance.
How has the fund performed for you?

eskbanker

https://www.vanguardinvestor.co.uk/investments/vanguard-global-bond-index-fund-gbp-hedged-dist/distributions lists the annual yield and the individual dividends?

ColdIron

It's not really an income fund with its relatively low yield, there are better funds for that purpose. It's better suited to controlling volatility, especially currency fluctuations with its hedging

MarcoM said:

How has the fund performed for you?

It performs the same for everyone and previous performance is widely available. If I bought it to manage volatility it does what it says on the tin. If I bought it to pay my bills I would be disappointed

NB It pays interest not dividend

MarcoM

ColdIron said:

It's not really an income fund with its relatively low yield, there are better funds for that purpose. It's better suited to controlling volatility, especially currency fluctuations with its hedging

MarcoM said:

How has the fund performed for you?

It performs the same for everyone and previous performance is widely available. If I bought it to manage volatility it does what it says on the tin. If I bought it to pay my bills I would be disappointed

NB It pays interest not dividend

what would you buy to pay your bills?

ColdIron

Somewhat simplistically: A higher interest yield bond fund (with consequent higher risk and lower downside mitigation) or any equity fund that pays decent dividends

Different bonds have different objectives, they are not all the same, you wouldn't just buy any old bond in the same way you wouldn't buy any old equity. Amazon or Tesla are not the same as British American Tobacco etc

MarcoM

ColdIron said:

Somewhat simplistically: A higher interest yield bond fund (with consequent higher risk and lower downside mitigation) or any equity fund that pays decent dividends

Different bonds have different objectives, they are not all the same, you wouldn't just buy any old bond in the same way you wouldn't buy any old equity. Amazon or Tesla are not the same as British American Tobacco etc

would a vanguard LS accumulation fund be a decent choice for someone who does not want to overcomplicate things? Basically selling units when income is needed. I guess this strategy would be bad if the fund value has a bad year.

ColdIron

There are various schools of thought regarding natural yield vs periodic sales but for regular income for regular expenses many (but not all) might choose the income class over the accumulation class regardless of the fund

VLS is a decent enough fire and forget, every man fund for general investing but it's not a dedicated income fund

It's a bit like a Ford Mondeo, good enough for general use but it won't win any Grand Prixs or take 50 people to Belgium for a booze cruise

It's a discussion that comes up here quite often and there is no single right answer

Linton

MarcoM said:

ColdIron said:

Somewhat simplistically: A higher interest yield bond fund (with consequent higher risk and lower downside mitigation) or any equity fund that pays decent dividends

Different bonds have different objectives, they are not all the same, you wouldn't just buy any old bond in the same way you wouldn't buy any old equity. Amazon or Tesla are not the same as British American Tobacco etc

would a vanguard LS accumulation fund be a decent choice for someone who does not want to overcomplicate things? Basically selling units when income is needed. I guess this strategy would be bad if the fund value has a bad year.

It all depends on the income you want to withdraw.  In particular.....

How much? -   If you withdraw too much income from an Acc fund the danger is that you will begin to cut into the  core growth investments you require to finance future withdrawals and thus will eventually run out of money.

Predictability? Do you want a steady income or are you happy to, for example, reduce your income during a crash?

Inflation?   - Will you want your income to rise with inflation?  This makes a major difference to the maximum incomey you can safely withdraw.

One option that may be appropriate for some people is to use the investments to buy an annuity which will guarantee an income, possibly inflation linked, for a specific period or the whole of your life.  Once bought the income turns up each month with zero effort on your part and zero (for practical purposes) risk.  The downside is that it is very inflexible - you cant stop the annuity and get your money back or exchange for a better one later.

There is no perfect lucrative, simple, and safe solution to the problem.

dunstonh

Is anyone invested in the Vanguard Gloabl Bond Index for income purposes?

I use the hedged version (wouldn't use the unhedged) but never use it by itself.  That would not be good investing.

would a vanguard LS accumulation fund be a decent choice for someone who does not want to overcomplicate things?

Its ok.   The OEIC funds are not as good as their MPS versions and other options appeal more (mainly on the back of VLS OEICs having home bias).  It would also need  some management if your objective is income and you are using growth funds.  You would probably need to run a cash float and use total return with periodic sales of units but certainly possible and would work if you understand total return strategies.

 I guess this strategy would be bad if the fund value has a bad year.

That is where your cash float comes in.

JohnWinder

what would you buy to pay your bills?

Fund A pays almost no dividend and no interest. Fund B pays a dividend which is currently a yield of 8%/year. Which is better as an 'income fund', or you would buy to 'pay your bills'?

And for completeness, Fund A has grown at 5%/year, give or take a bit, for the last 50 years, is widely diversified and low cost, while Fund B is a basket case of collapsing businesses like Kodak with a high management fee.

Be careful of overlooking the reality that investment returns are made up of capital gains and dividends (or interest). It easily leads to muddled thinking if we view something that pays a dividend as the only type of good income fund, because it completely ignores the reality that you can get income to buy your bread by realising capital gains. Yes, it's easier to passively receive a dividend than actively sell something; and yes, the taxation considerations might favour one; and yes it's not pleasant selling assets when values are down to buy bread, but all of those issues need to be 'priced', valued as to their worth/cost. The alternative, the view that income ought to be from dividends, risks leading you to poor value investment products marketed precisely to meet that possibly irrational need, which also needs to be priced. The investments you want ought to be low cost, diversified, risk/return appropriate for your needs, and transparent enough to allow assessment of their worth and suitability etc. It's total return that buys your bread, and if the total return from a government bond fund provides enough income for your needs then it's a satisfactory income fund.

thunderroad88

If you’re considering LS80 I assume you’re not averse to more risk than the Global Index bond. Have you considered a monthly income fund to pay those bills? A couple of good ones which have also had good capital growth over 5 years are Aegon Diversified Monthly Income yielding over 6% and Artemis Monthly Distribution yielding over 4%, or a mix of the two?