Anyone buying gilts right now?

jimjames

GeoffTF said:

I bought a chunk of TG36 today. It is only about 2% of my portfolio though. It does not change my overall bond percentage. Equities have been rising and bonds falling recently, so selling equities to buy bonds could make sense as a rebalancing measure.

TG31/33/35 all look pretty good redemption yields too. What made you plump for the TG36? Long term investor but never bought gilts before so trying to understand the process for selection of the right one

Edit - just realised TG36 is index linked but the 3 I mentioned aren't.

masonic

aroominyork said:

Alexland said:

m_c_s said:
Gilts just tanked again today!

Looking at VGOV it's only down 0.18% so far today. I'm more concerned with asking a gimp to yield.

I don't see how gilts can further tank without very bad things happening.

VGOV is 5% worse than IGLH, a hedged global bond ETF, since August. Certainly doesn't reflect well on the govt.

UK gilts tend to be longer duration, so you'd normally expect to see an effect like this. Won't explain the whole difference, but with the USD strengthening and global trade fears ahead of inauguration day, there are other factors at play.

Hoenir

jimjames said:

GeoffTF said:

I bought a chunk of TG36 today. It is only about 2% of my portfolio though. It does not change my overall bond percentage. Equities have been rising and bonds falling recently, so selling equities to buy bonds could make sense as a rebalancing measure.

TG31/33/35 all look pretty good redemption yields too. What made you plump for the TG36? Long term investor but never bought gilts before so trying to understand the process for selection of the right one

What are your personal objectives?  The further into the future the redemption date the more volatile the value is likely to be. Should you have need to liquidte the investment. Are you planning to hold them in a GIA or within a tax wrapper? This may well influence the decision as to whether interest or capital gain are more important. 

jimjames

Hoenir said:

jimjames said:

GeoffTF said:

I bought a chunk of TG36 today. It is only about 2% of my portfolio though. It does not change my overall bond percentage. Equities have been rising and bonds falling recently, so selling equities to buy bonds could make sense as a rebalancing measure.

TG31/33/35 all look pretty good redemption yields too. What made you plump for the TG36? Long term investor but never bought gilts before so trying to understand the process for selection of the right one

What are your personal objectives?  The further into the future the redemption date the more volatile the value is likely to be. Should you have need to liquidte the investment. Are you planning to hold them in a GIA or within a tax wrapper? This may well influence the decision as to whether interest or capital gain are more important. 

Holding outside ISA so capital gain is more important. Main objective is to finally move from 100% equities with retirement looming but 2031-35 would be fine to wait for redemption if value drops. It's interesting to see how the different durations are behaving at the moment with the volatility.

aroominyork

masonic said:

aroominyork said:

Alexland said:

m_c_s said:
Gilts just tanked again today!

Looking at VGOV it's only down 0.18% so far today. I'm more concerned with asking a gimp to yield.

I don't see how gilts can further tank without very bad things happening.

VGOV is 5% worse than IGLH, a hedged global bond ETF, since August. Certainly doesn't reflect well on the govt.

UK gilts tend to be longer duration, so you'd normally expect to see an effect like this. Won't explain the whole difference, but with the USD strengthening and global trade fears ahead of inauguration day, there are other factors at play.

Fair point. IGLD is about two years shorter duration than VGOV and the effect is quite strong: comparing TG32 and T34 which have about two years' difference in maturity, the latter has fallen >2% more over the last six months so you could reduce the 5% to about 3%.

GeoffTF

jimjames said:

GeoffTF said:

I bought a chunk of TG36 today. It is only about 2% of my portfolio though. It does not change my overall bond percentage. Equities have been rising and bonds falling recently, so selling equities to buy bonds could make sense as a rebalancing measure.

TG31/33/35 all look pretty good redemption yields too. What made you plump for the TG36? Long term investor but never bought gilts before so trying to understand the process for selection of the right one

Edit - just realised TG36 is index linked but the 3 I mentioned aren't.

The ONS says that the average man of my age dies in 2036. I have excellent health, so I will most likely beat that. Most of my money will go to charity, so I am funding a liability which will most likely be at 2036 or beyond. We have recently had very low interest rates. One of the risks that I face is the refunding risk, so I want to build up a sizeable holding of TG36. There are other risks, but TG36 is not my only gilt holding, and my total bond holding is about 40% of my investment portfolio.

CorseyEdge

I've been reading this thread with real interest, thank you. I'm looking to tidy up the defensive element of my SIPP (25%). I'm hoping to retire around the beginning of 2029/30 and I'm contemplating selling the real mixed bag of global bond funds, wealth preservers and MMFs I have gathered over the years and use the proceeds to build a small bond ladder to cover the first 3 FYs years at £10k/yr. That'll then hopefully provide some more certainty on return and also stop me tinkering with funds in that part of my portfolio. I'm still accumulating btw.

I 'think' that buying £8k of TG29, £8.4k of TR29 and £7.9k of TG30 should accomplish that £10k/yr. Those gilts are ~4.4% yield. Does that sound about right? Are these the right gilts - should I be considering IL Gilts instead or a mix?Appreciate any help - thanks again.

DRS1

CorseyEdge said:

I've been reading this thread with real interest, thank you. I'm looking to tidy up the defensive element of my SIPP (25%). I'm hoping to retire around the beginning of 2029/30 and I'm contemplating selling the real mixed bag of global bond funds, wealth preservers and MMFs I have gathered over the years and use the proceeds to build a small bond ladder to cover the first 3 FYs years at £10k/yr. That'll then hopefully provide some more certainty on return and also stop me tinkering with funds in that part of my portfolio. I'm still accumulating btw.

I 'think' that buying £8k of TG29, £8.4k of TR29 and £7.9k of TG30 should accomplish that £10k/yr. Those gilts are ~4.4% yield. Does that sound about right? Are these the right gilts - should I be considering IL Gilts instead or a mix?Appreciate any help - thanks again.

If you are holding them in a SIPP you don't need to worry about the coupon rate so how about TS29, T30 and TR30?
Frankly the difference in yield is 0.1% so hardly significant.

CorseyEdge

I hadn't really appreciated (or even understood) the impact of choice on whether they were in a SIPP or not - thank you! Maybe I need to go and do some more research on the different gilt choices before I venture any further.

CorseyEdge

Thank you @[Deleted User] - very handy - I'll have a look at that and see if I can put together a strategy to meet a 10k/year, 3 year ladder starting from 29/30. I will have to do some research into the coupon differences in gilt offerings within a SIPP and also whether I go for IL or not also. Thanks again.