Retirees Portfolio Revamp

chiang_mai

aroominyork said:

chiang_mai said:

aroominyork said:

Bostonerimus1 said:

Recent events have caused me to increase my cash allocation and move some US equities and bonds to global counterparts.

Similar here. In late Feb/early March, ie before tariffgate, we reduced equities from 60% to 40% and the US part of our equities from 50% to 40%. Three reasons: thinking Trump might do bad things; moving into retirement (at least semi-); decent returns available on fixed interest. We are now 40% equities; 21% actively managed corporate bond funds (Man Dynamic Income & Sterling Corporate Bond); 9% global aggregate bond fund; 6% UK gilt fund; 24% quasi-cash (mostly CSH2, a little TG25). When interest rates reduce another c.0.5% I imagine we'll move some of the cash into the bond index funds. This change was mostly at OH's insistence, but I am comfortable with it and glad not to carry all the responsibility myself in these strange times.

P.S.  The OP asked about “lower risk, managed, global bond funds that produce reasonable monthly income”. Returns come with risk so it depends what you mean by ‘lower risk’. Man Sterling Corporate Bond fund distributes income monthly with a yield around 7% (and, over the last few years, a good amount of capital growth) but you would need to look at the credit quality to determine whether it meets your risk appetite (see https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00001CLQK&tab=3 ).

Thank you for mentioning it, I've looked at the Man bond fund but its credit profile is below what I would consider to be, lower risk, one of the few areas of bonds that I do understand a little. The L&G Strategic Bond continues to sit well with me, the average credit being more robust.

The Man fund is investment grade, holding "at least 80% of its Net Asset Value in investment grade securities". The L&G fund includes nearly 50% junk bonds (sub BBB). Why do think its credit is more robust?

Ah, thank you for pointing that out, I compared the wrong Man income bond, rather than use the link supplied I looked it up on a 2am bathroom run! This one:  https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00001H5HO&tab=3

That is, as they say, a horse of a different colour.

aroominyork

chiang_mai said:

aroominyork said:

chiang_mai said:

aroominyork said:

Bostonerimus1 said:

Recent events have caused me to increase my cash allocation and move some US equities and bonds to global counterparts.

Similar here. In late Feb/early March, ie before tariffgate, we reduced equities from 60% to 40% and the US part of our equities from 50% to 40%. Three reasons: thinking Trump might do bad things; moving into retirement (at least semi-); decent returns available on fixed interest. We are now 40% equities; 21% actively managed corporate bond funds (Man Dynamic Income & Sterling Corporate Bond); 9% global aggregate bond fund; 6% UK gilt fund; 24% quasi-cash (mostly CSH2, a little TG25). When interest rates reduce another c.0.5% I imagine we'll move some of the cash into the bond index funds. This change was mostly at OH's insistence, but I am comfortable with it and glad not to carry all the responsibility myself in these strange times.

P.S.  The OP asked about “lower risk, managed, global bond funds that produce reasonable monthly income”. Returns come with risk so it depends what you mean by ‘lower risk’. Man Sterling Corporate Bond fund distributes income monthly with a yield around 7% (and, over the last few years, a good amount of capital growth) but you would need to look at the credit quality to determine whether it meets your risk appetite (see https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00001CLQK&tab=3 ).

Thank you for mentioning it, I've looked at the Man bond fund but its credit profile is below what I would consider to be, lower risk, one of the few areas of bonds that I do understand a little. The L&G Strategic Bond continues to sit well with me, the average credit being more robust.

The Man fund is investment grade, holding "at least 80% of its Net Asset Value in investment grade securities". The L&G fund includes nearly 50% junk bonds (sub BBB). Why do think its credit is more robust?

Ah, thank you for pointing that out, I compared the wrong Man income bond, rather than use the link supplied I looked it up on a 2am bathroom run! This one:  https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00001H5HO&tab=3

That is, as they say, a horse of a different colour.

That's Dynamic Income which I also hold to provide some diversification. It's short duration, higher yield, more EM exposure. But I'd still say your L&G fund is not an investment grade fund, so barely 'robust'.

chiang_mai

aroominyork said:

chiang_mai said:

aroominyork said:

chiang_mai said:

aroominyork said:

Bostonerimus1 said:

Recent events have caused me to increase my cash allocation and move some US equities and bonds to global counterparts.

Similar here. In late Feb/early March, ie before tariffgate, we reduced equities from 60% to 40% and the US part of our equities from 50% to 40%. Three reasons: thinking Trump might do bad things; moving into retirement (at least semi-); decent returns available on fixed interest. We are now 40% equities; 21% actively managed corporate bond funds (Man Dynamic Income & Sterling Corporate Bond); 9% global aggregate bond fund; 6% UK gilt fund; 24% quasi-cash (mostly CSH2, a little TG25). When interest rates reduce another c.0.5% I imagine we'll move some of the cash into the bond index funds. This change was mostly at OH's insistence, but I am comfortable with it and glad not to carry all the responsibility myself in these strange times.

P.S.  The OP asked about “lower risk, managed, global bond funds that produce reasonable monthly income”. Returns come with risk so it depends what you mean by ‘lower risk’. Man Sterling Corporate Bond fund distributes income monthly with a yield around 7% (and, over the last few years, a good amount of capital growth) but you would need to look at the credit quality to determine whether it meets your risk appetite (see https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00001CLQK&tab=3 ).

Thank you for mentioning it, I've looked at the Man bond fund but its credit profile is below what I would consider to be, lower risk, one of the few areas of bonds that I do understand a little. The L&G Strategic Bond continues to sit well with me, the average credit being more robust.

The Man fund is investment grade, holding "at least 80% of its Net Asset Value in investment grade securities". The L&G fund includes nearly 50% junk bonds (sub BBB). Why do think its credit is more robust?

Ah, thank you for pointing that out, I compared the wrong Man income bond, rather than use the link supplied I looked it up on a 2am bathroom run! This one:  https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00001H5HO&tab=3

That is, as they say, a horse of a different colour.

That's Dynamic Income which I also hold to provide some diversification. It's short duration, higher yield, more EM exposure. But I'd still say your L&G fund is not an investment grade fund, so barely 'robust'.

Yes, by comparison I can agree. I did say at the outset I know very little about bonds so don't beat me up too much.

aroominyork

chiang_mai said:

aroominyork said:

chiang_mai said:

aroominyork said:

chiang_mai said:

aroominyork said:

Bostonerimus1 said:

Recent events have caused me to increase my cash allocation and move some US equities and bonds to global counterparts.

Similar here. In late Feb/early March, ie before tariffgate, we reduced equities from 60% to 40% and the US part of our equities from 50% to 40%. Three reasons: thinking Trump might do bad things; moving into retirement (at least semi-); decent returns available on fixed interest. We are now 40% equities; 21% actively managed corporate bond funds (Man Dynamic Income & Sterling Corporate Bond); 9% global aggregate bond fund; 6% UK gilt fund; 24% quasi-cash (mostly CSH2, a little TG25). When interest rates reduce another c.0.5% I imagine we'll move some of the cash into the bond index funds. This change was mostly at OH's insistence, but I am comfortable with it and glad not to carry all the responsibility myself in these strange times.

P.S.  The OP asked about “lower risk, managed, global bond funds that produce reasonable monthly income”. Returns come with risk so it depends what you mean by ‘lower risk’. Man Sterling Corporate Bond fund distributes income monthly with a yield around 7% (and, over the last few years, a good amount of capital growth) but you would need to look at the credit quality to determine whether it meets your risk appetite (see https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00001CLQK&tab=3 ).

Thank you for mentioning it, I've looked at the Man bond fund but its credit profile is below what I would consider to be, lower risk, one of the few areas of bonds that I do understand a little. The L&G Strategic Bond continues to sit well with me, the average credit being more robust.

The Man fund is investment grade, holding "at least 80% of its Net Asset Value in investment grade securities". The L&G fund includes nearly 50% junk bonds (sub BBB). Why do think its credit is more robust?

Ah, thank you for pointing that out, I compared the wrong Man income bond, rather than use the link supplied I looked it up on a 2am bathroom run! This one:  https://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F00001H5HO&tab=3

That is, as they say, a horse of a different colour.

That's Dynamic Income which I also hold to provide some diversification. It's short duration, higher yield, more EM exposure. But I'd still say your L&G fund is not an investment grade fund, so barely 'robust'.

Yes, by comparison I can agree. I did say at the outset I know very little about bonds so don't beat me up too much.

No beating up intended - just exploring. It took me years to get my head around bonds and I am still some distance behind many on this forum. But if you want a fund with a 'robust' average credit rating, and without commenting on the quality or performance of the L&G fund, you should maybe consider whether a fund without an investment grade mandate - at least 80% invested in investment grade bonds (BBB or higher) - fits your needs. The L&G average is BB+ which is considered sub-investment grade/junk territory.

chiang_mai

thunderroad88 said:

chiang_mai said:

I suppose that using cash as a proxy for bonds, when I for one don't fully understand if the inverse relationship works or not, and if it does, with which bonds, seems reasonable. Ditto the idea of dividend funds, Fidelity global Dividend caught my eye and is worth exploring perhaps.

That’s my strategy…haven’t seen the need to risk bonds for the last few years and probably the next few too. Seven years cash held in various bank deposit accounts and mmfs have and will yield 4-6%, as much or more than bonds, with less risk so that will do for me for now. My only bond exposure is the little contained in my Orbis Global Balanced fund. I also hold Fidelity Global Dividend as a less volatile, US exposure reducing option.

I liked the Fidelity Global Dividend idea but then realised that that with 26% US equities, it's difficult to control allocation to either geography, independent of the other. Where I finally settled on this was to use Fidelity European Dividend instead and to use VUSA to finely control the extent of US investment. Fidelity European also fits nicely because it has a 30% UK element which complements my Artemis Smartgarp UK holding that is 80% UK and  20% continental Europe and it seems there is very little overlap. or duplication. I came down quite firmly on the side of managed funds because the potential for downside support from an active manager adds significant value for me. I also like the independent control provided by funds that don't overlap undesirable or problematic geographies.

thunderroad88

chiang_mai said:

thunderroad88 said:

chiang_mai said:

I suppose that using cash as a proxy for bonds, when I for one don't fully understand if the inverse relationship works or not, and if it does, with which bonds, seems reasonable. Ditto the idea of dividend funds, Fidelity global Dividend caught my eye and is worth exploring perhaps.

That’s my strategy…haven’t seen the need to risk bonds for the last few years and probably the next few too. Seven years cash held in various bank deposit accounts and mmfs have and will yield 4-6%, as much or more than bonds, with less risk so that will do for me for now. My only bond exposure is the little contained in my Orbis Global Balanced fund. I also hold Fidelity Global Dividend as a less volatile, US exposure reducing option.

I liked the Fidelity Global Dividend idea but then realised that that with 26% US equities, it's difficult to control allocation to either geography, independent of the other. Where I finally settled on this was to use Fidelity European Dividend instead and to use VUSA to finely control the extent of US investment. Fidelity European also fits nicely because it has a 30% UK element which complements my Artemis Smartgarp UK holding that is 80% UK and  20% continental Europe and it seems there is very little overlap. or duplication. I came down quite firmly on the side of managed funds because the potential for downside support from an active manager adds significant value for me. I also like the independent control provided by funds that don't overlap undesirable or problematic geographies.

I can see your logic about trying to avoid overlap and duplication, although I don’t try to be overly precise on that myself but keep it in mind. I like Fidelity Global as it provides exposure to a good selection of the usual top UK and European divi suspects which compliments the different UK and European holdings in my Orbis and Ranmore global funds. I like the smartgarp funds and hold the UK one to give me UK value exposure. I’ve held off on the European version just because I’m at my desired level of European exposure and I’d have to fiddle with my other funds to fit it in and they’ve all done well. An X-ray of my pf has me now at 50% US, 20% Europe, 15% UK and 15% Asia/ ROW, which I’m ok going forward with (for now)

chiang_mai

I've now rebuilt my portfolio which looks like this:

45% Equities
13% Bonds
42% CSH2 cash

I'll review my level of equities holdings in a month or so, if things are settling down, I'm prepared to increase to 60%.

Geographically, things look like this:

US - 18%
UK - 19%
EU - 27%
Japan - 21%
Dev Asia - 2%
EM - 10%

The US element is being kept purposely low as an aide to making me explore alternate markets. When I'm more comfortable with the way things appear, the US element will likely increase to around 30/35% but I doubt I will want to take it higher given the present government. I use the L&G US Index for this market hence adjustments to market share are easy enough to make.

For the remaining markets I've lent on Artemis Smartgarp products more heavily than I expected and have deployed them in the UK, Europe and in Emerging Markets for 20% of my holdings..

Lastly is Fidelity EU Divi Inc which spares the EU space with Artemis but with very little dup;icatoon or overlap. I've achieved what I wanted to do which was to be able to control allocations to individual markets easily, mostly via a single funds. I've also assigned the L&G Index to the US market which means I can largely forget about US centric funds.

As you've probably gathered I'm no longer a fan of the US, despite having lived there for 15 years. Much of the reason is that despite receiving US Social Security Retirement benefits for 14 years, Musk's DOGE team wrote and cancelled them because I am not a US resident (totalisation agreements between the UK and USA do not require me to be resident in order to receive them)....this is a new requirement that may or may not be real but the bottom line is they have stopped funding my retirement and it's almost impossible to challenge. My view is that if the US is prepared to halt social security payments to 75 year old  non-resident ex green card holders, there is no limit to what they might do next.   

aroominyork

Dreadful to hear about your USA pension.

So you have lots of CSH2 dry powder. Since it is benchmarked to SONIA which is usually 0.05% below the base rate, how quickly would it respond to a cut in base rate by the MPC next week? According to Morningstar its effective duration is 0.41 ie about 5 months, while its modified duration is 0.19 ie about 2 months (and effective maturity 0.39). Which metric guides how quickly current holdings will be replaced by lower coupon holdings and hence over what period of time will CSH2's yield fully reflect a lower base rate?

wmb194

chiang_mai said:

I've now rebuilt my portfolio which looks like this:

45% Equities
13% Bonds
42% CSH2 cash

I'll review my level of equities holdings in a month or so, if things are settling down, I'm prepared to increase to 60%.

Geographically, things look like this:

US - 18%
UK - 19%
EU - 27%
Japan - 21%
Dev Asia - 2%
EM - 10%

The US element is being kept purposely low as an aide to making me explore alternate markets. When I'm more comfortable with the way things appear, the US element will likely increase to around 30/35% but I doubt I will want to take it higher given the present government. I use the L&G US Index for this market hence adjustments to market share are easy enough to make.

For the remaining markets I've lent on Artemis Smartgarp products more heavily than I expected and have deployed them in the UK, Europe and in Emerging Markets for 20% of my holdings..

Lastly is Fidelity EU Divi Inc which spares the EU space with Artemis but with very little dup;icatoon or overlap. I've achieved what I wanted to do which was to be able to control allocations to individual markets easily, mostly via a single funds. I've also assigned the L&G Index to the US market which means I can largely forget about US centric funds.

As you've probably gathered I'm no longer a fan of the US, despite having lived there for 15 years. Much of the reason is that despite receiving US Social Security Retirement benefits for 14 years, Musk's DOGE team wrote and cancelled them because I am not a US resident (totalisation agreements between the UK and USA do not require me to be resident in order to receive them)....this is a new requirement that may or may not be real but the bottom line is they have stopped funding my retirement and it's almost impossible to challenge. My view is that if the US is prepared to halt social security payments to 75 year old  non-resident ex green card holders, there is no limit to what they might do next.   

Didn’t you say that you reside in Thailand? What’s the US’ treaty with Thailand? Won’t that be the relevant one?

chiang_mai

wmb194 said:

chiang_mai said:

I've now rebuilt my portfolio which looks like this:

45% Equities
13% Bonds
42% CSH2 cash

I'll review my level of equities holdings in a month or so, if things are settling down, I'm prepared to increase to 60%.

Geographically, things look like this:

US - 18%
UK - 19%
EU - 27%
Japan - 21%
Dev Asia - 2%
EM - 10%

The US element is being kept purposely low as an aide to making me explore alternate markets. When I'm more comfortable with the way things appear, the US element will likely increase to around 30/35% but I doubt I will want to take it higher given the present government. I use the L&G US Index for this market hence adjustments to market share are easy enough to make.

For the remaining markets I've lent on Artemis Smartgarp products more heavily than I expected and have deployed them in the UK, Europe and in Emerging Markets for 20% of my holdings..

Lastly is Fidelity EU Divi Inc which spares the EU space with Artemis but with very little dup;icatoon or overlap. I've achieved what I wanted to do which was to be able to control allocations to individual markets easily, mostly via a single funds. I've also assigned the L&G Index to the US market which means I can largely forget about US centric funds.

As you've probably gathered I'm no longer a fan of the US, despite having lived there for 15 years. Much of the reason is that despite receiving US Social Security Retirement benefits for 14 years, Musk's DOGE team wrote and cancelled them because I am not a US resident (totalisation agreements between the UK and USA do not require me to be resident in order to receive them)....this is a new requirement that may or may not be real but the bottom line is they have stopped funding my retirement and it's almost impossible to challenge. My view is that if the US is prepared to halt social security payments to 75 year old  non-resident ex green card holders, there is no limit to what they might do next.   

Didn’t you say that you reside in Thailand? What’s the US’ treaty with Thailand? Won’t that be the relevant one?

The Dual Tax Agreement between TH and the US allows the US to tax those payments and forbids TH from doing so, that is all. The reason I posted that was to reinforce that even the most seemingly secure forms of  retirement income, can change and become insecure.