Advice on fund

Heedtheadvice

As far as BIPS is concerned I would have written quite similar to Linton and Coldiron regarding suitability - and that has to be tempered with your own objectives etc.

I hold it as part of a fairly well balanced portfolio  for  retirement Income ( but only as part of my pension income )  that I want to grow as well. It forms one part of the higher income/dividend investments from various sources as well as middle of the road ITs and those aimed at higher gain.

In that aspect, over quite a few years, it has had just a little volatility and a very good ( for me) total return gain of just 6% since 2011 ( but not in real terms!)along with 7% divi in an ISA has been better than cash.

But is it for you? Who knows.

dont_use_vistaprint

Thanks for the comments.

So my understanding is it's an an income generating asset, and inside a SIPP it would regularly pay into the cash balance rather than focus on capital growth & you could re-invest that but would pay fees each time so it's more suited to someone drawing those dividends as regular income and it fairly reliable in the income of 6-7% and the capital is generally low risk but don't expect much or even any growth. And look for discounts when timing the initial buy.

Im assuming the dividends it pays inside a SIPP would be treated as uncrystallised currently?  and may in future be subject to tax even before drawdown ? 

is that about right ? 

Seems to me it was a very good recommendation 

 

InvesterJones

No, that's not quite right. It's a fund of junk bonds for the most part, the capital investment in which is not considered low risk.

If you are looking for a low risk, low growth, investment then govt bonds, or money market funds, would be more suitable. Or if you want something in between, investment grade bonds, though the additional return is not very high over govt bonds.

Linton

dont_use_vistaprint said:

Thanks for the comments.

So my understanding is it's an an income generating asset, and inside a SIPP it would regularly pay into the cash balance rather than focus on capital growth & you could re-invest that but would pay fees each time so it's more suited to someone drawing those dividends as regular income and it fairly reliable in the income of 6-7% and the capital is generally low risk but don't expect much or even any growth. And look for discounts when timing the initial buy.

Im assuming the dividends it pays inside a SIPP would be treated as uncrystallised currently?  and may in future be subject to tax even before drawdown ? 

is that about right ? 

Seems to me it was a very good recommendation 

 

BIPS (or any other investment) could only be recommended in the light of your circumstances and what you want from your investment.  It really is a niche fund bought for specific objectives.  It is unclear what your objectives are and how your proposed addition fits in with the rest of your portfolio.  Do you want more of the same or something to provide a better balance to your current holdings.

If your SIPP is fully uncrystallised or fully uncrystallised the income from a fund will retain the same status.  However, I believe if your portfolio is partially crystalised exactly how income is treated will depend on the  platform and whether it treats the crystallised and uncrystallised parts as separate portfolios.

Income within a SIPP wont be subject to tax unless the whole structure of pensions is drastically changed.  Drawing down the income from a pension will be taxed exactly in the same way as any other drawdown. 

ColdIron

dont_use_vistaprint said:

you could re-invest that but would pay fees each time so it's more suited to someone drawing those dividends as regular income and it fairly reliable in the income of 6-7%

Many platforms do not charge for reinvestment so that's not a primary concern and even if it were it's not one I would use when choosing between asset classes

It's certainly suited to income (for some) and the dividend will be more stable than its share price

the capital is generally low risk but don't expect much or even any growth.

I wouldn't call sub investment grade bonds low risk. If you look at its KIID it's rated 5 out of 7; that puts it way above cautious and on par with many equity heavy funds. When equities go down so will BIPS, it generally moves in the same direction as equities

Without dividend reinvestment it's down 5%-6% over five years. Even with reinvestment it's up less than 30% while something like VWRL is up over 70% over the same period. Lower total return for similar volatility. If you don't want the dividends I can't see the rationale behind:

Seems to me it was a very good recommendation 

That would depend upon your objectives. We don't know yours. For some it could be, for others it would be a lemon

dont_use_vistaprint

InvesterJones said:

No, that's not quite right. It's a fund of junk bonds for the most part, the capital investment in which is not considered low risk.

If you are looking for a low risk, low growth, investment then govt bonds, or money market funds, would be more suitable. Or if you want something in between, investment grade bonds, though the additional return is not very high over govt bonds.

Thanks but it seems to be doing v good for the people that are invested in it so I'll take the recommendation

eskbanker

dont_use_vistaprint said:

InvesterJones said:

No, that's not quite right. It's a fund of junk bonds for the most part, the capital investment in which is not considered low risk.

If you are looking for a low risk, low growth, investment then govt bonds, or money market funds, would be more suitable. Or if you want something in between, investment grade bonds, though the additional return is not very high over govt bonds.

Thanks but it seems to be doing v good for the people that are invested in it so I'll take the recommendation

But what does 'doing v good' actually mean, i.e. against what measure?

Linton

ColdIron said:

dont_use_vistaprint said:

you could re-invest that but would pay fees each time so it's more suited to someone drawing those dividends as regular income and it fairly reliable in the income of 6-7%

Many platforms do not charge for reinvestment so that's not a primary concern and even if it were it's not one I would use when choosing between asset classes

It's certainly suited to income (for some) and the yield will be more stable than its share price

the capital is generally low risk but don't expect much or even any growth.

I wouldn't call sub investment grade bonds low risk. If you look at its KIID it's rated 5 out of 7; that puts it way above cautious and on par with many equity heavy funds. When equities go down so will BIPS, it generally moves in the same direction as equities

Without dividend reinvestment it's down 5%-6% over five years. Even with reinvestment it's up less than 30% while something like VWRL is up over 70% over the same period. Lower total return for similar volatility. If you don't want the dividends I can't see the rationale behind:

Seems to me it was a very good recommendation 

That would depend upon your objectives. We don't know yours. For some it could be, for others it would be a lemon

Capital value is only down about 2% over 10 years.  So it's just bouncing around affected by both equity sentiment and market interest rates rather than showing any long term trend. An income investor should not be bothered but whether the OP would is unclear.

InvesterJones

dont_use_vistaprint said:

InvesterJones said:

No, that's not quite right. It's a fund of junk bonds for the most part, the capital investment in which is not considered low risk.

If you are looking for a low risk, low growth, investment then govt bonds, or money market funds, would be more suitable. Or if you want something in between, investment grade bonds, though the additional return is not very high over govt bonds.

Thanks but it seems to be doing v good for the people that are invested in it so I'll take the recommendation

Presumably the people investing in it are not looking for a low risk to capital investment. You said you were - is that now not the case?

Bostonerimus1

The OP seems to have little grasp on different asset classes and is open to decision making based on advice from LLMs and because an investment seems to do doing well for other people. What could go wrong? BIPS looks like an expensive managed bond fund with a lot of less than "A" rated bonds that, like all bond funds, has had its value hit by interest rate increases. It should see an increase in value as rates fall in an effort to stimulate the economy. Anything that pays a dividend of 7% is swimming in some risky income waters. I like to split my risk between dividends and growth.