Bond ETF suggestions

granta

The bulk of my ISA holdings is now in Vanguard VEVE and a few other equity funds/stocks.

I'm looking to start building up a more defensive 20% in my portfolio to reduce volatility and looking for ideas of suitable ETFs to hold long-term, probably bond ETFs, but open to other suggestions too, e.g. gold

ColdIron

Must it be an ETF? I would cast my net wider and consider open ended funds as well, or do you have a reason to dismiss them?

Albermarle

iShares Physical Metals plc Share Price (SGLN) Physical Gold ETC | SGLN

granta

ETFs are preferable because I've generally been streamlining my portfolio down to VEVE and making use of transfer promotions for providers like HL where an ETF-only portfolio attracts a valuable fee cap.
I'm still doing some shuffling so for now ETFs are better for me. 

At some point, I may just settle with a platform like ii where holding funds makes no difference.

May I ask what you see as the advantage of funds over ETfs for bonds? Happy to hear your suggestions of funds for me research further

GeoffTF

VAGS is worth considering.

ColdIron

granta said:

May I ask what you see as the advantage of funds over ETfs for bonds? Happy to hear your suggestions of funds for me research further

My principal reason was simply choice but taking advantage of caps is a decent enough reason to favour ETFs, if you can find a suitable one

There are many different types of bonds with differing objectives just as the are with equities. Few people would ask for a generic 'equity fund'

For a fund a generic choice might be Vanguard Global Bond Index Fund GBP Hedged, as used in the Lifestrategy range. Globally diversified with a spread of issuer from sovereign to corporate debt (AAA to BBB) etc and currency hedged which may help with volatility but I just plucked that one out of thin air

Personally, although I am a fan of gold, bonds would be higher on my list than gold

aroominyork

I'd first think about how much you want in the UK and how much internationally. 50/50 isn't a bad starting point, since the UK has higher base rates than most other developed countries (hence, in theory, better returns) but international gives you useful diversification. Then decide if you want only govt bonds or high quality corporate bonds as well. For international, have a look at AGBP and VAGS for aggregate bonds (govt + corporate), or IGLH for govt only. Those three are all hedged to Sterling. There are no aggregate bond funds for the UK so if you want corporate you would need to buy separate govt and corporate ETFs. You can also think about index-linked if you want inflation protection, though I only use them for short terms bonds which I will be using for income during the next few years. 

masonic

Monevator has published a series of articles weighing up use of broad commodities as an alternative diversifier. Worth a read at least.

aroominyork

masonic said:

Monevator has published a series of articles weighing up use of broad commodities as an alternative diversifier. Worth a read at least.

Yes - there is a model which looks at low/high growth and rising/falling inflation, and identifies the best investments for each of the four combinations. Commodities are in the high growth + rising inflation quadrant, along with high yield bonds. It really depends on how many scenarios you want your diversification to try to match.

GeoffTF

ColdIron said:

granta said:

May I ask what you see as the advantage of funds over ETfs for bonds? Happy to hear your suggestions of funds for me research further

For a fund a generic choice might be Vanguard Global Bond Index Fund GBP Hedged, as used in the Lifestrategy range. Globally diversified with a spread of issuer from sovereign to corporate debt (AAA to BBB) etc and currency hedged which may help with volatility but I just plucked that one out of thin air

That fund is an OEIC. VAGP and VAGS are ETFs and are very similar and cheaper. They do not hold as many bonds, but the difference is not likely to matter much.

ColdIron

GeoffTF said:

ColdIron said:

granta said:

May I ask what you see as the advantage of funds over ETfs for bonds? Happy to hear your suggestions of funds for me research further

For a fund a generic choice might be Vanguard Global Bond Index Fund GBP Hedged, as used in the Lifestrategy range. Globally diversified with a spread of issuer from sovereign to corporate debt (AAA to BBB) etc and currency hedged which may help with volatility but I just plucked that one out of thin air

That fund is an OEIC. VAGP and VAGS are ETFs and are very similar and cheaper. They do not hold as many bonds, but the difference is not likely to matter much.

That's right. The OP asked:

granta said:

May I ask what you see as the advantage of funds over ETfs for bonds? Happy to hear your suggestions of funds for me research further