Thoughts on Bonds versus Stocks & Shares

incus432

noclaf said:

incus432 said:

. I also now hold short dated bond funds IGLS and GLT5 (0-5 year and 1-5 yr respectively) as well as some longer term VGOV (9.3 yr). for money I might need to access.  

Interested in the two ETFs bolded and in particular reasons for holding both? I use AGBP stand-alone for bonds exposure in my S&SISA and also taking a bit more interest in bonds generally.

No very well thought out reason but I watned short term UK gilt funds - these seem to perform slightly differently to each other and are cheap so I'm hedging my bets.

ABGP appears to be longer effective duration so is more volatile. It is mostly non UK  with big chunks of Chinese bonds which I do not want

Dornfield

Interestingly, Bloomberg notes of UK Gov. 15 year bonds: "The £8.5 billion ($10.4 billion) offering of debt due in 2040 drew excess of £119 billion of demand on Tuesday, beating the previous record for the securities originally sold in September."

Bonds very popular at the moment, seemingly.

Dornfield

incus432 said:

It is mostly non UK  with big chinks of Chinese bonds which I do not want

Ah, the troublesome proximity of the I and U keys on a QWERTY keyboard!  The near neighbours S and W keys have similarly Freudian potential: I once famously emailed a "White Paper" to Senior Exec and Board.  Oops.

incus432

ha! corrected

shortseller09

aldershot said:

Further to my post above regarding concentration risk in global equity funds, here are a couple of new observations curtesy of Charlie Bilello who writes a weekly chart blog (US centric but worth following).....

Apple, Nvidia, and Microsoft now each have a higher weighting in the global equity market than every country outside the US except for Japan.

The 18.6% combined weighting of the Magnificent Seven in the global equity market is more than the entire weighting of Japan, the UK, China, Canada and India … combined



I think global equity funds that follow the MSCI or FTSE global are carrying higher and higher risk that is not really being discussed. It makes me think of "safe" bond funds when interest rates were near zero. They weren't safe at all and lost around 30% in 2022 when rates returned to more normal levels. They're much safer now (at current prices and yields) and should have a place in your portfolio (just my opinion of course!).

Interestingly, despite the huge global weighting of Mag 7, the US is near the bottom of the league table in terms of concentration by country (as at Nov 24).

aldershot

Interesting chart, but I have two observations:
1) tiny stock markets are bound to have higher concentration into a few leading companies. Saudi is a complete outlier as it only does one thing. 
2) if the top 3 companies in Cyprus or Romania lose half their value, I lose 0.01% (or something) of my portfolio and the rest of the world won't care. If the top 3 companies in the US lose half their value, I lose 5% of my portfolio immediately and even worse, they'll certainly drag the rest of the market and the world with them.