Advice on fund

Heedtheadvice

"But the classic retirement income generator is the annuity"

Quite true Bistonerimus! But what is the total return on that (over say 20 years) compared to so e of the bind funds being discussed? 

Obviously the longer the income from the annuity the more one gets a financial income benefit but what happens to your capital? Not a lot to pass on then then to your beneficiaries or to fund ( possibly unexpected) expenses such property deterioration etc.

As usual, reward vs ( perceived) risk. The latter might not materiise so eggs and baskets come into play.

Bostonerimus1

Heedtheadvice said:

"But the classic retirement income generator is the annuity"

Quite true Bistonerimus! But what is the total return on that (over say 20 years) compared to so e of the bind funds being discussed? 

Obviously the longer the income from the annuity the more one gets a financial income benefit but what happens to your capital? Not a lot to pass on then then to your beneficiaries or to fund ( possibly unexpected) expenses such property deterioration etc.

As usual, reward vs ( perceived) risk. The latter might not materiise so eggs and baskets come into play.

The longer you live the closer the "return" of  an annuity comes to the initial payout rate, but it will never ghet any lager than that. However, an annuity isn't an investment so the comparison isn't a good one; an annuity is an insurance product.

Linton

Heedtheadvice said:

"But the classic retirement income generator is the annuity"

Quite true Bistonerimus! But what is the total return on that (over say 20 years) compared to so e of the bind funds being discussed? 

Obviously the longer the income from the annuity the more one gets a financial income benefit but what happens to your capital? Not a lot to pass on then then to your beneficiaries or to fund ( possibly unexpected) expenses such property deterioration etc.

As usual, reward vs ( perceived) risk. The latter might not materiise so eggs and baskets come into play.

The reason for buying an annuity in retirement is not the return over 20 years but rather the total income over your lifetime,no matter how long it lasts.

 If you want to provide an inheritance dont use an annuity. As with all investments choose the one most appropriate to your needs.

Bostonerimus1

aroominyork said:

Bostonerimus1 said:

aroominyork said:

Bostonerimus1 said:

dont_use_vistaprint said:

Bostonerimus1 said:

dont_use_vistaprint said:

Bostonerimus1 said:

dont_use_vistaprint said:

Bostonerimus1 said:

dont_use_vistaprint said:

wmb194 said:

dont_use_vistaprint said:

Linton said:

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. 

Yes better balance. Something for regular income to add to a small LGPS & interest from savings to cover al
the normal costs and with liquidy if I decide I need it. I have the VLS80 for longer term growth opportunity , money markets and savings for cash but with interest rates falling I'm inclined to keep less in those and so something paying 6-8% seems good. 

The high capital risks mentioned by some  do not add up given its long history of being stable and the discounting looks attractive. 

Past performance is no guarantee of future performance.

so why do people constantly post graphs of past performance to try and back up their statements on here? 

no no one ever looks at the graphs of past performance right ? There's absolutely nothing to be learned from them

There's no guarantee about the future, but past performance can give some clues and in the end it's all the investor has. And it's why I will never invest in single stocks or risky sectors like junk bonds. I would avoid BIPS as you are taking a lot of risk and paying management fees to do it. You mentioned VLS80 and I like that as the vast majority of the bonds it contains are A rated or better and you get exposure to global equities.

I have a huge amount of money in VLS80, it's done really well to date , it's grown way beyond my expectation, but it's going to drop & and when it does, I will be buying even more -  I'm happy to leave it there for another 5 to 7 if needed but it also does not provide income.

money markets and savings are going down and This seems to fit nicely in the middle

There's an income version of VLS80 that distributes dividends and of course any fund can generate "income" - all you need to do is take some dividends or capital gains. But why do you want income/dividends now?

Are you suggesting this fun now is comparable to the distribution of VLS 80 ? or comparable to a capital growth fund where you just keep selling bits of capital ...... honestly

Nope, just pointing out that a total return approach from something like VLS is a legitimate way to generate income and asking why you want income now and from such a risky source as a junk bond fund.

Its effort and having to sell off capital to gain income ? Income assets are just easier for income , I guess that's a clue in the name 


It's not that risky IMO  , the people I know in it make good income and as pointed out its history shows it bouncing around 2% capital  it's hardly risky in my view. VLS80 is far more risky with big drops every now and then. If you're using that for income you'd be having to sell in possibly the worst timing. I think vls80 is best for long term capital growth & this fund better for income 

I prefer a total return approach to income generation with the idea that it spreads the risk across asset classes and would not feel comfortable with the majority of my bond holdings being B rated. But I can see the attraction of the BIPS dividend. The question still remains, why do you want income now? Are you retired?

The 'total return' question is an interesting one. A friend of mine retired a few years ago and favours income-generating assets; while I was still working/accumulating I thought "surely you want your assets to increase in value as much as possible". Now that I am heading into retirement I understand it; you want to receive a reasonably consistent natural income from interest/dividends and not risk having to sell assets during a downturn. So I have bought a few bond funds that generate good income and have switched a couple of my vanilla equity index funds for income funds (index income in the UK and smart beta income in EM). 

I expect your responses will be that you are spreading risk across asset classes and so only sell those which have not fallen. However that seems at odds with you telling us, quite often, that you only hold two or three equity and bond index funds in addition to your rental income.

While I don't take income from my investments, if I was relying on them for income I'd probably have a fairly aggressive equity and bond allocation with a substantial cash allocation, maybe something like 60/30/10. I'd probably look for some dividends from the equities as well as growth and keep my bond allocation high quality and with maturities less than 10 years. I'd try to keep my withdrawals to the natural yield and target something like 3%. I base this on the efficient frontier. 

3% is a low yield and brings us back to the role of higher yielding bond funds in a retirement portfolio. While my equities are mostly index funds, in the corporate bond space there is more potential for active managers to earn their corn. I own four actvely managed bond funds and their average yield over the last three years is:

Man Dynamic Income 9.9% (plus 6.8% pa capital growth)

Man Sterling Corporate Bond 8.0% (plus 7.8% pa capital growth)

Royal London Short Duration Credit 5.6% (plus 2.5% pa capital growth)

Artemis Short-Duration Strategic Bond 5.3% (plus 2.5% pa capital growth).

Even my gilt fund has yielded 4.3%, although my hedged Vanguard Global Bond Index has yielded your 3.0% (although I do not take income from it). My point is that actively managed corporate bond funds are a good place to look for income when compared to selling equities in a total return strategy, and dividend hero equities do not yield as much.

P.S. Just for completeness's sake, BIPS' three year average yield is 7.3% (plus 1.8% pa capital growth).

I’m quite conservative when it comes to income and so if I was taking income from my investments I would try to stick to natural yield and keep the withdrawals around 3%. I’d hope to get more than that from dividends and bond distributions, but my avoidance of B rated bonds puts a cap on that. I planned for retirement income generation many years ago and took a job with a DB pension option and bought my rental property with the idea that it would take stress off my investments as far as income production goes and so I could stick to high quality corporate and government bonds. That’s become a bit moot now as I don’t need  income from investments and can still concentrate on growth from equities.

I avoided P2P when it was popular for the same reason I avoid B rated bonds; I want to minimize default risk and I keep the average duration of my bonds less than 10 years to mitigate interest rate risk.

BIPS and similar funds are off the table for me because they hold lots of B rated bonds and because of the management fees they charge, but those factors might be a positive for others.

aroominyork

Bostonerimus1 said:

aroominyork said:

Bostonerimus1 said:

aroominyork said:

Bostonerimus1 said:

dont_use_vistaprint said:

Bostonerimus1 said:

dont_use_vistaprint said:

Bostonerimus1 said:

dont_use_vistaprint said:

Bostonerimus1 said:

dont_use_vistaprint said:

wmb194 said:

dont_use_vistaprint said:

Linton said:

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. 

Yes better balance. Something for regular income to add to a small LGPS & interest from savings to cover al
the normal costs and with liquidy if I decide I need it. I have the VLS80 for longer term growth opportunity , money markets and savings for cash but with interest rates falling I'm inclined to keep less in those and so something paying 6-8% seems good. 

The high capital risks mentioned by some  do not add up given its long history of being stable and the discounting looks attractive. 

Past performance is no guarantee of future performance.

so why do people constantly post graphs of past performance to try and back up their statements on here? 

no no one ever looks at the graphs of past performance right ? There's absolutely nothing to be learned from them

There's no guarantee about the future, but past performance can give some clues and in the end it's all the investor has. And it's why I will never invest in single stocks or risky sectors like junk bonds. I would avoid BIPS as you are taking a lot of risk and paying management fees to do it. You mentioned VLS80 and I like that as the vast majority of the bonds it contains are A rated or better and you get exposure to global equities.

I have a huge amount of money in VLS80, it's done really well to date , it's grown way beyond my expectation, but it's going to drop & and when it does, I will be buying even more -  I'm happy to leave it there for another 5 to 7 if needed but it also does not provide income.

money markets and savings are going down and This seems to fit nicely in the middle

There's an income version of VLS80 that distributes dividends and of course any fund can generate "income" - all you need to do is take some dividends or capital gains. But why do you want income/dividends now?

Are you suggesting this fun now is comparable to the distribution of VLS 80 ? or comparable to a capital growth fund where you just keep selling bits of capital ...... honestly

Nope, just pointing out that a total return approach from something like VLS is a legitimate way to generate income and asking why you want income now and from such a risky source as a junk bond fund.

Its effort and having to sell off capital to gain income ? Income assets are just easier for income , I guess that's a clue in the name 


It's not that risky IMO  , the people I know in it make good income and as pointed out its history shows it bouncing around 2% capital  it's hardly risky in my view. VLS80 is far more risky with big drops every now and then. If you're using that for income you'd be having to sell in possibly the worst timing. I think vls80 is best for long term capital growth & this fund better for income 

I prefer a total return approach to income generation with the idea that it spreads the risk across asset classes and would not feel comfortable with the majority of my bond holdings being B rated. But I can see the attraction of the BIPS dividend. The question still remains, why do you want income now? Are you retired?

The 'total return' question is an interesting one. A friend of mine retired a few years ago and favours income-generating assets; while I was still working/accumulating I thought "surely you want your assets to increase in value as much as possible". Now that I am heading into retirement I understand it; you want to receive a reasonably consistent natural income from interest/dividends and not risk having to sell assets during a downturn. So I have bought a few bond funds that generate good income and have switched a couple of my vanilla equity index funds for income funds (index income in the UK and smart beta income in EM). 

I expect your responses will be that you are spreading risk across asset classes and so only sell those which have not fallen. However that seems at odds with you telling us, quite often, that you only hold two or three equity and bond index funds in addition to your rental income.

While I don't take income from my investments, if I was relying on them for income I'd probably have a fairly aggressive equity and bond allocation with a substantial cash allocation, maybe something like 60/30/10. I'd probably look for some dividends from the equities as well as growth and keep my bond allocation high quality and with maturities less than 10 years. I'd try to keep my withdrawals to the natural yield and target something like 3%. I base this on the efficient frontier. 

3% is a low yield and brings us back to the role of higher yielding bond funds in a retirement portfolio. While my equities are mostly index funds, in the corporate bond space there is more potential for active managers to earn their corn. I own four actvely managed bond funds and their average yield over the last three years is:

Man Dynamic Income 9.9% (plus 6.8% pa capital growth)

Man Sterling Corporate Bond 8.0% (plus 7.8% pa capital growth)

Royal London Short Duration Credit 5.6% (plus 2.5% pa capital growth)

Artemis Short-Duration Strategic Bond 5.3% (plus 2.5% pa capital growth).

Even my gilt fund has yielded 4.3%, although my hedged Vanguard Global Bond Index has yielded your 3.0% (although I do not take income from it). My point is that actively managed corporate bond funds are a good place to look for income when compared to selling equities in a total return strategy, and dividend hero equities do not yield as much.

P.S. Just for completeness's sake, BIPS' three year average yield is 7.3% (plus 1.8% pa capital growth).

I avoided P2P when it was popular for the same reason I avoid B rated bonds; I want to minimize default risk and I keep the average duration of my bonds less than 10 years to mitigate interest rate risk.

Ah yes, the nostalgia of P2P, a sub-junk product looking for an opportunity, and that opportunity was near-zero interest rates. Though Ratesetter was quite nice, essentially paying a fixed interest rate and with a provision fund for bad debts. I held the one year product, figuring (correctly, for once) that it would be the safest spot if chickens came home to roost.

Heedtheadvice

Bostonerimus1 said:

Heedtheadvice said:

"But the classic retirement income generator is the annuity"

Quite true Bistonerimus! But what is the total return on that (over say 20 years) compared to so e of the bind funds being discussed? 

Obviously the longer the income from the annuity the more one gets a financial income benefit but what happens to your capital? Not a lot to pass on then then to your beneficiaries or to fund ( possibly unexpected) expenses such property deterioration etc.

As usual, reward vs ( perceived) risk. The latter might not materiise so eggs and baskets come into play.

The longer you live the closer the "return" of  an annuity comes to the initial payout rate, but it will never ghet any lager than that. However, an annuity isn't an investment so the comparison isn't a good one; an annuity is an insurance product.

You and Linton are both correct in many aspects....

...but for an income seeker in retirement it really is a fair comparison ( and it was you Bistonerimus that brought Annuities into this thread about PIBS! ).

For that type of income seeker those,  funds, equities, cash, MM investments are all potentially viable albeit different financial methods, radically so, ranging from potential capital loss or gain risks to handing over your capital in return for a ( hopefully) known/ stable income ( inflation linked or not) or accepting an income (variable) based upon investments ( whilst retaining/ losing/increasing capital). In there somewhere is the pension, -also not without risks in many cases ( SIPPS, Equitable Life  failed employers are a few examples along with many schemes that are good to 'gold plated' ,)

Just saying there is more than one way to skin a cat...and better still to diversify with several cats! Some of those cats may well become dead ducks and not all should be considered suitable or prudent choices.

Getting  well off topic....apologies OP

OldScientist

Going back to BIPS. According to the data at https://www.dividendmax.com/united-kingdom/london-stock-exchange/investment-trusts/invesco-bond-income-plus-limited/dividends since 2009, the annual dividend per share has ranged from a high 17.6p (the unusually high value in 2012 – although data at https://www.fidelity.co.uk/factsheet-data/factsheet/JE00B6RMDP68-invesco-bond-income-plus-ltd/price-chart suggest an annual dividend of around 12p in that year) to a low of 10p (2013-2020). In other words, fairly stable over that period and in the 5 or 6 years prior to that too (individual dividends from 1991 are available at the fidelity link). Of course, future dividends are unknown.

The nearest non-fund equivalent (i.e. a regular income plus the return of capital in nominal terms) would be something like the nominal gilt T56 with an income rate of about 5.2%. I note that this is, absent government default, a guaranteed cash flow (unlike BIPS) albeit one that will stop in 30 years time.

Annuities and collapsing gilt ladders are not directly comparable since they, generally, spend down the capital.

My largest concern, as per any nominal income stream, would be inflation since, in real terms, the 2009 dividend of 13p would now need to have been nearly 20p in order to have kept up with inflation (rather than the 12.25p actually delivered in 2025 – a shortfall in real terms of roughly 40%). Obviously inflation will also affect the real value of the NAV (with the exception of a 50% drop from mid-2007 to early 2009, the NAV has been fairly steady in nominal terms).

dont_use_vistaprint

daveshep26 said:

Linton said

If your requirement was fairly stable high income:
 -  capital value bouncing up and down within +/- 15% for almost all of 30 years with no long term falls
 - 242 underlying holdings
 - about 70% of holdings with duration < 5 years
looks pretty safe to me as anyone buying this fund for income would likely have no intention of selling and so have no concern about temporary mostly small variability in price. In any case a prudent income portfolio would require holdings in a wider range of asset types and should arguably be more geographically spread given the 50% or so dependence on the UK of this fund.

Summarising, in my view the fund looks reasonable for its purpose as part of a wider portfolio - I may even look at it for my income portfolio.  Whether it meets the OP's objectives is of course a very different matter.

I hold BIPS as part of an income equity portfolio, it has, for a number of years, performed as you may expect (I acknowledge and understand all the comments above). I’m happy with it and regularly review, I will almost certainly increase holding in 2026 as recent outcome from this month’s review- as a component of entire portfolio it has been doing exactly as expected- but I hold primarily for regular income for the next 6 ish years until all my DB pensions kick in.  

There was a video from the BIPS management on the AJ Bell platform recently -November.(?) which I thought was quite informative , if that’s openly available I’d recommend watching ,
HTH

Is your decision to invest more due to the increased active management & shift to slightly better class bonds or solely on its performance to date? . The person who recommended this to me is also putting  in significantly higher amounts in 2026. 

dont_use_vistaprint

Heedtheadvice said:

Bostonerimus1 said:

Heedtheadvice said:

"But the classic retirement income generator is the annuity"

Quite true Bistonerimus! But what is the total return on that (over say 20 years) compared to so e of the bind funds being discussed? 

Obviously the longer the income from the annuity the more one gets a financial income benefit but what happens to your capital? Not a lot to pass on then then to your beneficiaries or to fund ( possibly unexpected) expenses such property deterioration etc.

As usual, reward vs ( perceived) risk. The latter might not materiise so eggs and baskets come into play.

The longer you live the closer the "return" of  an annuity comes to the initial payout rate, but it will never ghet any lager than that. However, an annuity isn't an investment so the comparison isn't a good one; an annuity is an insurance product.

You and Linton are both correct in many aspects....

...but for an income seeker in retirement it really is a fair comparison ( and it was you Bistonerimus that brought Annuities into this thread about PIBS! ).

For that type of income seeker those,  funds, equities, cash, MM investments are all potentially viable albeit different financial methods, radically so, ranging from potential capital loss or gain risks to handing over your capital in return for a ( hopefully) known/ stable income ( inflation linked or not) or accepting an income (variable) based upon investments ( whilst retaining/ losing/increasing capital). In there somewhere is the pension, -also not without risks in many cases ( SIPPS, Equitable Life  failed employers are a few examples along with many schemes that are good to 'gold plated' ,)

Just saying there is more than one way to skin a cat...and better still to diversify with several cats! Some of those cats may well become dead ducks and not all should be considered suitable or prudent choices.

Getting  well off topic....apologies OP

There’s endless ways and whatever way you choose there will always be someone telling you it’s not how they would do it. While things are inside a sipp not in drawdown and tax doesn’t apply & if ethics aren’t a concern, it’s nothing but numbers on a screen getting bigger or smaller , the mechanics and costs of how that happens are completely irrelevant.

The better one is the one that makes a bigger number from when I click to buy to when I click sell / withdraw

daveshep26

I hold BIPS as part of an income equity portfolio, it has, for a number of years, performed as you may expect (I acknowledge and understand all the comments above). I’m happy with it and regularly review, I will almost certainly increase holding in 2026 as recent outcome from this month’s review- as a component of entire portfolio it has been doing exactly as expected- but I hold primarily for regular income for the next 6 ish years until all my DB pensions kick in.  

There was a video from the BIPS management on the AJ Bell platform recently -November.(?) which I thought was quite informative , if that’s openly available I’d recommend watching ,
HTH

Is your decision to invest more due to the increased active management & shift to slightly better class bonds or solely on its performance to date? . The person who recommended this to me is also putting  in significantly higher amounts in 2026. 

Income portfolio adjustment/ re-balancing was my decision making approach- along with performance related.  Essentially, it was to stick to strategy - I planned to regularly invest in building a diversified income portfolio and BIPS fell behind plan in 2025 (sub-optimally/ luckily (?) ) I chased CTY performance in recent period) - as stated BIPS had absolutely performed as expected so I was just righting my own plan really