Should I change my gilt investments

QrizB

Oranda said:

All I can see on performance of the guilt index tracker fund I’m in for the last 5 years is -12.0%, -37%, -12.9%,10% and latest is -9.5%. So that was the reason for my initial question as I’m 4 months from retirement. 

That's unusually poor.

What's the name of the fund?

Oranda

QrizB said:

Oranda said:

All I can see on performance of the guilt index tracker fund I’m in for the last 5 years is -12.0%, -37%, -12.9%,10% and latest is -9.5%. So that was the reason for my initial question as I’m 4 months from retirement. 

That's unusually poor.

What's the name of the fund?

The fund is BlackRock Over 15 years Gilt Index Tracker.

And unfortunately during the first 3 of those last 5 years the lifestyle process kicked in and moved a large %age of my uncrystallised pot into that fund. I lost around 30% of my pension pot 5 years before my retirement. My own fault I guess for not keeping an eye on it, and naively thinking it should have been low risk and "set and forget" as part of the "suggested" lifestyle process. Still, I have read that others have suffered similarly, and nobody saw Covid or guilt crash.

I crystallised a large chunk of my pot a couple of years ago, which is in a better performing fund but still have some in the guilt tracker.  

Split milk now but don't really want to leave it there as I cant see it will recover with the next 2-3 years. 

dunstonh

Still, I have read that others have suffered similarly, and nobody saw Covid or guilt crash.

It's not to do with Covid, other than perhaps Covid extending the period of quantitative easing longer than it would have otherwise.

Split milk now but don't really want to leave it there as I cant see it will recover with the next 2-3 years. 

Although gilts are the best performers of all the defensive options over the last 3 months and beating STMM over 6 months.

The bonds crash has happened.  You cannot change that.  Now it is starting a recovery, you are looking to avoid that recovery.

Oranda

dunstonh said:

Still, I have read that others have suffered similarly, and nobody saw Covid or guilt crash.

It's not to do with Covid, other than perhaps Covid extending the period of quantitative easing longer than it would have otherwise.

Split milk now but don't really want to leave it there as I cant see it will recover with the next 2-3 years. 

Although gilts are the best performers of all the defensive options over the last 3 months and beating STMM over 6 months.

The bonds crash has happened.  You cannot change that.  Now it is starting a recovery, you are looking to avoid that recovery.

I'm aware I cant change it (hence my reference to spilt milk).

If you had £24K in that guilt fund and needed to crystallise it to take TFLS's over the next 2 years, would you leave it there, or move it to another fund? 

artyboy

Oranda said:

dunstonh said:

Still, I have read that others have suffered similarly, and nobody saw Covid or guilt crash.

It's not to do with Covid, other than perhaps Covid extending the period of quantitative easing longer than it would have otherwise.

Split milk now but don't really want to leave it there as I cant see it will recover with the next 2-3 years. 

Although gilts are the best performers of all the defensive options over the last 3 months and beating STMM over 6 months.

The bonds crash has happened.  You cannot change that.  Now it is starting a recovery, you are looking to avoid that recovery.

I'm aware I cant change it (hence my reference to spilt milk).

If you had £24K in that guilt fund and needed to crystallise it to take TFLS's over the next 2 years, would you leave it there, or move it to another fund? 

OP, you appeared to have missed a few less than subtle comments, but just to be absolutely, 100% clear....

it is GILT

not GUILT

Alexland

Oranda said:
nobody saw Covid or guilt crash.

We all knew a virus outbreak was a possibility there were already films about it.

Several of us were posting warnings here about bonds (which includes gilts) leading up to the crash

Here's a couple of posts from November 2021 just weeks before the crash started:

https://forums.moneysavingexpert.com/discussion/comment/78787785/#Comment_78787785
Bonds are offering an 'almost return free risk' at the moment so I wouldn't touch VLS20 with a barge pole.

https://forums.moneysavingexpert.com/discussion/comment/78745826/#Comment_78745826
It does feel like bond investors are going to be slowly boiled like a frog to inflation and interest rates given just enough hope along the way that they don't see the full danger of their circumstances until it is too late.

And a fuller explanation of what was going to happen earlier in March 2021:

https://forums.moneysavingexpert.com/discussion/comment/78199051/#Comment_78199051
"Bonds have historically been considered a safe asset when used in portfolio construction but anything can become risky if the price gets too high and they now offer very little yield and there are signs that the 40 year positive run for bonds is coming to an end and they could be poor investments going forwards."

SVaz

If you are going to be taking tax free cash over the next 2 years ( is it £24k or 25% of £24k)
then that amount needs to be in either cash or short term money market funds already.
It’s not worth taking any risk with for such a short amount of time. 

DRS1

SVaz said:

If you are going to be taking tax free cash over the next 2 years ( is it £24k or 25% of £24k)
then that amount needs to be in either cash or short term money market funds already.
It’s not worth taking any risk with for such a short amount of time. 

Earlier posts suggested the total uncrystallised was c £30k and that £8k of that was in something called Pension Deposit (which sounded like a cash/cash equivalent fund).
I confess I don't know how that tallies with £24k in the gilts fund and some other amount in equities.

QrizB

Oranda said:

QrizB said:

Oranda said:

All I can see on performance of the guilt index tracker fund I’m in for the last 5 years is -12.0%, -37%, -12.9%,10% and latest is -9.5%. So that was the reason for my initial question as I’m 4 months from retirement. 

That's unusually poor.

What's the name of the fund?

The fund is BlackRock Over 15 years Gilt Index Tracker.

This one?

https://www.trustnet.com/factsheets/p/lm60/aviva-pen-blackrock-over-15-year-gilt-index-tracker-fp-pn

The current performance isn't quite as you state, but even so it's down almost 50% over 5 years:

Oranda said:

I lost around 30% of my pension pot 5 years before my retirement.

Over those same five years, however, annuity rates have doubled.

Look at this post, for example:

https://forums.moneysavingexpert.com/discussion/comment/81675043/#Comment_81675043

In 2021, £100k would have bought a 65-year-old an RPI-linked annuity of £2685 a year.

Take that £100k and knock off 46% (the loss in your gilt fund over 5 years). You've now got £54k.

In 2025, £54k will buy a 65-year-old an RPI-linked annuity of £2918 a year.

So the gilt fund as done what it was designed to do; it's preserved the value of the annuity you'll be able to buy with your pension.

Oranda said:

My own fault I guess for not keeping an eye on it, and naively thinking it should have been low risk and "set and forget" as part of the "suggested" lifestyle process.

It is a low-risk fund for anyone intending to buy an annuity, and is exactly what would be expected for a lifestyle fund targeting an annuity purchase.

Oranda

DRS1 said:

SVaz said:

If you are going to be taking tax free cash over the next 2 years ( is it £24k or 25% of £24k)
then that amount needs to be in either cash or short term money market funds already.
It’s not worth taking any risk with for such a short amount of time. 

Earlier posts suggested the total uncrystallised was c £30k and that £8k of that was in something called Pension Deposit (which sounded like a cash/cash equivalent fund).
I confess I don't know how that tallies with £24k in the gilts fund and some other amount in equities.

DRS1 - I’ve had further money go into the uncrystallised pot today from another small pension that I had, so total uncrystallised pot has increased to 33K. So the 3 funds in which it is invested have increased in proportion of the lifestyle investment path. Hence why 24K is now sat in the gilt fund.

SVaz - Over next 2 years will be taking 25% of this in tax free cash. The 75% then moves to my drawdown pot (different fund) which has been performing well.