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Bond/fixe interest etc part of Balanced Portfolio
satish mittal
Posted: 28 July 2010 13:10:53(UTC)
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Can you please advice me selection of 10 Bonds/ fixed interest/ UK Government bonds/ Global aggregate bonds/ Global high yield bonds/ hedge funds/ privare equaty which should form part of Balanced Portfoli in the present environment.
Thanks
Satish Mittal
DENNIS
Posted: 29 July 2010 13:59:38(UTC)
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Best to go for a Unit Trust fund to spread your risk. I find Hargreaves Lansdown a very good on line service.
Anonymous Post
Posted: 29 July 2010 14:26:54(UTC)
#3
Anonymous 1 needed this 'Off the Record'

I don't trust myself in buying individual bonds. Instead I've bought the following bond funds to diversify my portfolio:

Fidelity Moneybuilder Income Fund
Invesco Perpetual Corporate Bond Fund
M&G Strategic Corporate Bond Fund
Threadneedle High Yield Bond Fund
Investec Global Bond Fund


I'm happy with them all, apart from M&G which has a 1.5% initial purchase charge.
Anonymous Post
Posted: 29 July 2010 14:44:00(UTC)
#4
Anonymous 2 needed this 'Off the Record'

You could always stick with funds that have some sort of rating - if you have access, look at what is on the OBSR approval list. If you use a platform such as Cofunds, or Funds Library, they will indicate which of these have a rating. I would tend to stick with the funds that have a good track record, although as you know what they have done in the past is no guarantee for what they will do in the future.

If you want a punt, consider Investec's Emerging Market Debt - some commentators thing this is an area where you could get some decent returns but it depends on how you/your client feel about investing in
Jonathan Miller(Citywire Research)
Posted: 29 July 2010 16:15:20(UTC)
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You can do further research by going to Citywire Selection, the guide to our best investment ideas. It's a dedicated part of the website where our independent research has put together our top selections for different areas of the market.

http://www.citywire.co.uk/money/selection


Here are our bond picks which cover the fixed income spectrum:

AEGON High Yield Bond
Allianz PIMCO Gilt Yield
Fidelity Moneybuilder Income
Templeton Global Bond
Gartmore Fixed Interest
Henderson Strategic Bond
Invesco Perpetual Corporate Bond
Invesco Perpetual Monthly Income Plus
Investec Emerging Markets Debt
Investec Global Bond
iShares GBP Index-Linked Gilts
ishares Global Inflation-Linked Bond
Legal & General Dynamic Bond Trust
M&G Optimal Income
M&G Strategic Corporate Bond
Old Mutual Global Strategic Bond
Schroder Corporate Bond
Schroder Monthly High Income

Jonathan Miller
Head of Research
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john_r
Posted: 29 July 2010 17:42:40(UTC)
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Another bond fund worth mentioning is Invesco Leveraged Hi Yield Fund. (tidm : ILH)
This is a closed end fund like an investment trust so there should be no additional fund charges, trailing commisions or annual fees to pay (Hargreaves Landsdown excepted).
This fund is currently yielding around 9% and is priced at a discount to NAV of 7%.
Holds a mixture of mainly B, BB, and BBB rated bonds so I consider it as a higher yield bond fund with a higher risk.

http://www.trustnet.com/...undcode=ITILH&univ=T
satish mittal
Posted: 30 July 2010 15:44:26(UTC)
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Thank you Mr Jonathan Millar & those you expressed their views. I do follow city wire's selection but initiated the discussion to get further views. I have taken interestment only in equaties so far but have done so since 1980 when LSE took initiative to arrange various seminars in London. My knowledge in Bonds, fixed interest etc is rather limited.
In addition to the Funds mentioned, I was also impressed with the following;

Artemis Strategic Assets Fund Acc
Templeton Global Total Return Bond (I think it is the same as Templeton Globoal Bond)
GLG Global Bond
Legal & General Dynamic Bond Fd Acc
M&G Corporate Bond
CF strategic Gilt A
Baillie Gifford Global Bond C Gross
Ecclesiastical Higher Income Income (City wire does mention else where)
SL Inv Higher Income
I had reservations for Henderson Strategic bond & Gartmore Fixes interest.

To complete the list what other Funds/Assets should we includ eg; Multiasset funds, Private Equity, Property (in the present environment), Absolute returns, Funds which are Hedged etc etc to enable the Investment to withstand if other down turn occurs. Although City Wire did post the of funds which did well in last down turn it would be nice to identify those funds again in all sectors.
Many thanks
Satish Mittal
Ronald Biggin
Posted: 30 July 2010 16:46:29(UTC)
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Posts: 1

Q.- What is max % to invest in Bonds and what spread across the various bond types? Is it the right time to invest re inflation prospects and market conditions? I am looking for growth not income at this stage.
Back ground - I will be retiring in 3 years. I sold all my UT's; OEICs; IT & EFTs in May to invest in a commercial property [ which has since fallen through], so I have cash back in my SIPPS at H-L to invest. I have been looking through the various bond results [ 3yr perf; Sharpe & Stand.Dev.] in Citywire.
Can anyone help
Ron Biggin
alistair richardson
Posted: 31 July 2010 11:36:31(UTC)
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Lot's of ETF bond funds here at http://uk.ishares.com/en/rc/ (look under fixed interest). Very low dealing costs, dependent on the broker you use of course, and low buy/sell spreads. Corporate bonds seem to be flavour of the day at the moment with government bonds less favoured.
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Mike L on 14/05/2018(UTC)
satish mittal
Posted: 02 August 2010 09:32:47(UTC)
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Hello
Is this the right time to invest in Bonds/fixed interest with so low interest rates or to park the money in other defence funds for the time ? We then need to identify funds which weather the storm last time such as Ecclesiastical Higher Income Income, Jupitor financial Opp, Jupitor Merlin Growth Port, Newton Real Return, Aberdeen Asia Pacific, Aberdeen World Eq ( Approx 14% down), Ecclesiastical Amity International, Fidelity SE Asia, First state Global emerging market etc. I get scared to learn that some of the present popular funds suffered severe downturn such as Artemis Income, Jupitor Sp situation, M&G Global Basics, M&G recovery, Newton Global high income, Old Mutual UK Select Mid Cap, Invesco Perpetual Income, Invesco Perpetual High Income etc. This time these funds have recovered to a large extent but next time it may take over 5 years. Have these fund managers taken any steps to stop this reoccurance. If so, we need to know these measures.
Will some one explain to me while assessing the net return, do we look into the Graph, Past performance year to year or Total return stated at the bottom of the graph. Sometimes I find a lot of diparity in the return. For example, in the First State Greater China Growth Fd, The Total Return in the year 2008 is -25.95 while the in the Past Performance does not show any negative return during the last 5 years.
Also, I understand Halifax is offering commission free ETF transations this week. Please check.
Satish Mittal
Jonathan Miller(Citywire Research)
Posted: 02 August 2010 11:38:04(UTC)
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Total return shows performance based on an investment made 1,3 or 5 years ago. The percentage shows what you would have made if you held an investment over that time.

Year to year numbers in effect break down performance, showing you how returns are split during individual periods.

mark spurrier
Posted: 12 May 2018 12:57:46(UTC)
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I sort of side with Buffet and Terry Smith on this one.

At this stage in the cycle, rates are going to go up and so bond capital values are going to fall. Why would I want to balance my portfolio with investments I know are going to perform badly?

There are exceptions...... some fixed interest funds are heavy in FRNs (floating rate notes) so they will not suffer the same sort of losses. Some are "strategic" and they are allowed to do all sorts of wild stuff with CDS and straight shorting to try and protect the capital value but, there is execution risk in that.

If you look at the Fundmith 2017 Shareholders meeting on you tube..Smith pontificates on why anyone would buy bonds. I can see why you might do it for 6 months or something but not as a core portfolio allocation

"Bond proxies" like Unilever are nothing like bonds
The company is growing, the dividends are growing and they can raise prices in inflationary periods and so protect against inflation

I hold 3% in a Artemis Stratgic bond and 3% in CQS High Yield IT both are experiments and bot have been royally outperfomrd by Unilever etc
Joe 90
Posted: 12 May 2018 17:01:42(UTC)
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I really am now on the horns of a dilemma. I have a 100% equity portfolio and 4 years to retirement. Received wisdom says diversify into different asset classes (ie bond funds) but with interest rates only going one way my brain tells me to avoid bonds. I’m not really happy holding cash getting 2%.
King Lodos
Posted: 12 May 2018 17:33:58(UTC)
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Cash earning 2% is an opportunity when 10yr Gilts only yield 1.44%.

The yield on bonds is the best predictor of returns (being that we're very bad at predicting rates, and you can always buy individual government bonds and get a guaranteed return).

Stocks are basically the only game in town (for a return that tends to beat inflation), and cash is: what return can I get buying stocks today vs what return might I be able to get buying stocks tomorrow .. Buffett sees cash as a perpetual call option on stocks – and while inflation's so low, you're not losing much holding cash
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Mr Helpful
Posted: 12 May 2018 17:34:35(UTC)
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mark spurrier;62183 wrote:
I sort of side with Buffet and Terry Smith on this one.
At this stage in the cycle, rates are going to go up and so bond capital values are going to fall. Why would I want to balance my portfolio with investments I know are going to perform badly?

The standard answer to "why Bonds?"; is to point out that Bond losses will be relatively small compared with Stock losses over a market half-cycle. But that standard answer does not address the option of Cash.
Mr Helpful
Posted: 12 May 2018 17:48:26(UTC)
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Joe 90;62191 wrote:
I really am now on the horns of a dilemma. I have a 100% equity portfolio and 4 years to retirement. Received wisdom says diversify into different asset classes (ie bond funds) but with interest rates only going one way my brain tells me to avoid bonds. I’m not really happy holding cash getting 2%.

1. Does the income thrown off by the Stocks, without distorting the portfolio unduly towards yield, meet income needs?
If so the option exists to never look at the capital fluctuations, rather like most people do not regularly track the fluctuation of their house price.
Your heirs might however be dischuffed with this option?

2. There are other less than perfectly correlated (to Stocks) Asset Classes to explore, which can throw off a reasonable income, while perhaps waiting for improved Stock prices.
Some core examples from our portfolio :-
Commodities : BRCI
Real Estate : BLND, BBOX
Renewables : TRIG
Infrastructure : BBGI, 3IN
Not recommendations !!!!!!

3. Have deliberately avoided mentioning Bond options where short duration seems presently the safest place to be.
High Yield and Mid/Long Duration may not provide the security hoped for from the moniker 'Bond'.
Try looking at 2008 price performance of any candidates.
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Mike L on 14/05/2018(UTC)
Joe 90
Posted: 12 May 2018 17:59:26(UTC)
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King Lodos;62192 wrote:
Cash earning 2% is an opportunity when 10yr Gilts only yield 1.44%.

The yield on bonds is the best predictor of returns (being that we're very bad at predicting rates, and you can always buy individual government bonds and get a guaranteed return).

Stocks are basically the only game in town (for a return that tends to beat inflation), and cash is: what return can I get buying stocks today vs what return might I be able to get buying stocks tomorrow .. Buffett sees cash as a perpetual call option on stocks – and while inflation's so low, you're not losing much holding cash


Thanks KL. I have a significant legacy to invest and I’m asking myself how would I feel if I’d selected cash, bonds, or more equities and then 4 years later things had gone against me.

Worst case scenario would be stock market collapse but I have other assets and would be able to sit tight for several years and hopefully ride out even a significant correction without having to sell.

If I’d gone for bonds and interest rates rise I’d feel a fool for not following my own logic. Holding cash means staying out of the market and trying to time a drop which I don’t fancy.

Conclusion: go for equities
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Apostate
Posted: 12 May 2018 17:59:39(UTC)
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The only bonds I hold are UK treasuries funds. Research has shown that gilts are the most negatively correlated asset to equities. If there is a stock market crash they are the asset most likely to move the other way - that's the only reason I have them.
King Lodos
Posted: 12 May 2018 22:39:45(UTC)
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Joe 90;62197 wrote:
Thanks KL. I have a significant legacy to invest and I’m asking myself how would I feel if I’d selected cash, bonds, or more equities and then 4 years later things had gone against me.

Worst case scenario would be stock market collapse but I have other assets and would be able to sit tight for several years and hopefully ride out even a significant correction without having to sell.

If I’d gone for bonds and interest rates rise I’d feel a fool for not following my own logic. Holding cash means staying out of the market and trying to time a drop which I don’t fancy.

Conclusion: go for equities


Well I'd start off considering a worst case scenario .. say a 60% crash of indefinite duration.

(I think the Financial Crisis could've been quite a bit worse than that, and might be if it happened now – with rates already being so low, and therefore less scope for stimulus .. but say it settles around a 60% loss.)

What's the worst loss you could tolerate across your portfolio? .. Maybe test yourself by simulating a 60% crash in your spreadsheet .. The most I could tolerate would be about 30% .. So I hold about 50% equities; 35% cash (similar to Warren Buffett's liquid portfolio) .. I could probably go higher if I made more use of Stop-losses, or maybe options – but the most important thing is probably staying within your psychological boundaries (because outside of those are where most the big mistakes are made)
Joe 90
Posted: 14 May 2018 05:20:48(UTC)
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King Lodos;62213 wrote:
Joe 90;62197 wrote:
Thanks KL. I have a significant legacy to invest and I’m asking myself how would I feel if I’d selected cash, bonds, or more equities and then 4 years later things had gone against me.

Worst case scenario would be stock market collapse but I have other assets and would be able to sit tight for several years and hopefully ride out even a significant correction without having to sell.

If I’d gone for bonds and interest rates rise I’d feel a fool for not following my own logic. Holding cash means staying out of the market and trying to time a drop which I don’t fancy.

Conclusion: go for equities


Well I'd start off considering a worst case scenario .. say a 60% crash of indefinite duration.

(I think the Financial Crisis could've been quite a bit worse than that, and might be if it happened now – with rates already being so low, and therefore less scope for stimulus .. but say it settles around a 60% loss.)

What's the worst loss you could tolerate across your portfolio? .. Maybe test yourself by simulating a 60% crash in your spreadsheet .. The most I could tolerate would be about 30% .. So I hold about 50% equities; 35% cash (similar to Warren Buffett's liquid portfolio) .. I could probably go higher if I made more use of Stop-losses, or maybe options – but the most important thing is probably staying within your psychological boundaries (because outside of those are where most the big mistakes are made)


Rather than looking at percentages I’m asking how long would it take for a significant stock market correction to recover. I’ve read that since 1900, when taking account of dividend reinvestment and inflation, the average recovery time after a crash has been around 2 years. Apparently even the 29 year Great Depression actually took more like 5 years for the market to recover. The longest was 8 years in the 1970s.

Of course I can’t verify these claims without further research but assuming they’re correct, I figure if I can hold cash (or cash equivalents) worth (say) 5 years of living expenses then I ought to be ok regardless of what percentage of my portfolio this constitutes.
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