Is it time to get some bonds?

fizio

I have a decent DB pension so have always had my DC into 100% equities - global or S&P trackers mostly - and this hasn't changed since I retired a few years ago. I am not too worried about the risk normally but there seems to be increasing talk of a correction as well as me thinking my longevity is decreasing over time.  In addition I am thinking that, at some point, I will need to actually extract from the pension as I am not looking to leave a huge inheritance. 

In the past I have ignored talk of corrections and all that as my timeframe was long enough to ride them out but I am now thinking maybe I need to rebalance and include bonds - especially as they seem to be providing reasonable returns these days.

There is a totally separate question of which bonds etc so go us/uk/global tracker or individual uk gilts maybe.. but thats a secondary concern right move.
I think I read a Vanguard report that was suggesting going from their 60/40 'default' fund to 30/70 - which seems excessive to me.

Just interested in what others are thinking about bonds now that the previous negativity has subsided. 

leosayer

What's the timeframe for drawing from your DC?

dunstonh

I think I read a Vanguard report that was suggesting going from their 60/40 'default' fund to 30/70 - which seems excessive to me.

Vanguard do not have a 30% equities fund.
I would be very surprised if Vanguard made a suggestion to time the market and make such a drastic move from 60 to 30.  Have you got a link to the source?

hobo_baggins

dunstonh said:

Vanguard do not have a 30% equities fund.

The Vanguard Target Retirement 2015 Fund has reached the end of it's glide path and is 30% Equities.

fizio

leosayer said:

What's the timeframe for drawing from your DC?

No specific reason for withdrawing other than wanting to do it before death... so 20 years maybe. I am also going to some limited withdrawals to transfer to ISA as part of my dc exit strategy 

m_c_s

dunstonh said:

I think I read a Vanguard report that was suggesting going from their 60/40 'default' fund to 30/70 - which seems excessive to me.

Vanguard do not have a 30% equities fund.
I would be very surprised if Vanguard made a suggestion to time the market and make such a drastic move from 60 to 30.  Have you got a link to the source?

Vanguard's dynamic asset allocation model (they call it time-varying asset allocation (TVAA)), is now heavily titled towards bonds (70%) based on current equity valuations (October 2025). It's ofcourse US focused but I think I did read a UK document a few weeks back which seemed to say the same thing. They don't specifically recommend it but no doubt people will take notice and some will follow it and adjust their portfolio.

https://corporate.vanguard.com/content/corporatesite/us/en/corp/vemo/bonds-remain-favor-time-varying-model-portfolio.html

The morningstar article suggesting that Vanguard is saying move from 60/40 to 30/70.
https://www.morningstar.com/news/marketwatch/20250828209/how-vanguard-defends-a-super-conservative-strategy-that-has-proved-surprisingly-controversial

Vanguard are now saying the expected next 10 year annualised returns are now higher for a 30/70 than a 60/40 portfolio; that's really their justification.

Linton

fizio said:

leosayer said:

What's the timeframe for drawing from your DC?

No specific reason for withdrawing other than wanting to do it before death... so 20 years maybe. I am also going to some limited withdrawals to transfer to ISA as part of my dc exit strategy 

In my view money not needed for 20 years can reasonably be held as 100 % equity and simply left and forgotten about whilst the market does as it will.  There will be any number of crashes and predictions of crashes between now and then. Do you intend to derisk each tiime?

 If you were to derisk sufficiently to make a significant difference how would you know when to reinvest in equity? How long are you prepared to wait for a crash that doesnt happen? There is a danger you would miss out on market growth. 

But you say you will want limited withdrawals to an ISA.  Is that a cash or S&S ISA?  If it's S&S you will probably be buying at much the same time and same market prices as you sell so no great risk.  If however you are going to move into cash ISAs fairly soon then it would be better to safeguard that money some time beforehand as the cost of a crash could be greater than the short term loss of returns.

fizio

Linton,
I am thinking of a permanent rebalance to include bonds rather than anything regular. While my outlook maybe 20 years I want the option to make withdrawals before hand as/when opportunity arises - eg changes to tax regs or thresholds etc or if I fancy buying something expensive. 

I would rather have the money in an ISA regardless of whether it’s stays socks or bonds so will withdraw from pension anytime I can’t get 20k in any other way. 

Albermarle

m_c_s said:

dunstonh said:

I think I read a Vanguard report that was suggesting going from their 60/40 'default' fund to 30/70 - which seems excessive to me.

Vanguard do not have a 30% equities fund.
I would be very surprised if Vanguard made a suggestion to time the market and make such a drastic move from 60 to 30.  Have you got a link to the source?

Vanguard's dynamic asset allocation model (they call it time-varying asset allocation (TVAA)), is now heavily titled towards bonds (70%) based on current equity valuations (October 2025). It's ofcourse US focused but I think I did read a UK document a few weeks back which seemed to say the same thing. They don't specifically recommend it but no doubt people will take notice and some will follow it and adjust their portfolio.

https://corporate.vanguard.com/content/corporatesite/us/en/corp/vemo/bonds-remain-favor-time-varying-model-portfolio.html

The morningstar article suggesting that Vanguard is saying move from 60/40 to 30/70.
https://www.morningstar.com/news/marketwatch/20250828209/how-vanguard-defends-a-super-conservative-strategy-that-has-proved-surprisingly-controversial

Vanguard are now saying the expected next 10 year annualised returns are now higher for a 30/70 than a 60/40 portfolio; that's really their justification.

Were Vanguards previous forecasts correct, did they predict the recent bull markets?

Also if you have cash savings as well, then they would presumably be included in the 70%.

Albermarle

Similar thread
SIPP protection — MoneySavingExpert Forum

OldScientist

fizio said:

I have a decent DB pension so have always had my DC into 100% equities - global or S&P trackers mostly - and this hasn't changed since I retired a few years ago. I am not too worried about the risk normally but there seems to be increasing talk of a correction as well as me thinking my longevity is decreasing over time.  In addition I am thinking that, at some point, I will need to actually extract from the pension as I am not looking to leave a huge inheritance. 

In the past I have ignored talk of corrections and all that as my timeframe was long enough to ride them out but I am now thinking maybe I need to rebalance and include bonds - especially as they seem to be providing reasonable returns these days.

Given that you have a DB pension (index linked?) and the state pension (either currently or eventually) how dependent are you on the income derived from your SIPP?

For example, the following situations might call for different asset allocations
1) your guaranteed income (i.e., DB and SP) covers all your expenditure (essential, e.g., household, bills, food, etc., and discretionary or nice to have), so portfolio income is not needed on a regular basis
2) your guaranteed income covers all your core spending while your portfolio pays for nice to have things.
3) your guaranteed income only covers a small fraction of your everyday needs, so income from the portfolio covers essential as well as discretionary spending.

FWIW, we are currently in the second category and have an allocation of just under 70% in equities in order to reduce some of the volatility of the variable withdrawals from the portfolio (and to satisfy my OH's preference for cash) and to ensure some growth for legacy purposes. Once both state pensions are in payment we will probably be in the first category and gradually allow the portfolio to drift up to 80% equities.