Funds Insider - Opening the door to funds

Welcome to the Citywire Funds Insider Forums, where members share investment ideas and discuss everything to do with their money.

You'll need to log in or set up an account to start new discussions or reply to existing ones. See you inside!

Notification

Icon
Error
Return on Gilts
+ Reply to discussion
Options
Thrugelmir
Posted: 07 October 2022 21:00:39(UTC)
#69

Joined: 01/06/2012(UTC)
Posts: 5,333

Thanks: 3258 times
Was thanked: 7901 time(s) in 3272 post(s)
Jimmy Page;241880 wrote:
Logic Prophets;241878 wrote:
Bulldog Drummond;241870 wrote:
Logic Prophets;241812 wrote:
Anyone working on a SWR of 4% (rule of thumb) in retirement might be quite happy to take advantage of the 4 - 4.5% available on some of the gilts dated between now and the next 20years or so.
Providing you are happy to stay the course, it’s almost the safest way of guaranteeing that at least proportion of your portfolio is meeting your retirement income and you can simply forget about it and take the coupons twice a year.
.

Could this be the very same Logic Prophets who threatened to follow me all around the forum to warn all that my thoughts on bonds were guaranteed to lose money? NB gilts have been a bloody disaster, as predicted. Junk has done okay, also as predicted.


That is a totally false statement but as you wanted to engage (or should I say ‘snipe’) your bond fund ‘SMIF’ is down 27% so I don’t think that you have any authority to advise anyone on this subject.

I was wrong to think that staying away from the forum for a few months would allow sleeping dogs to lie but nope…. still wide awake and restless.

I've no particular skin in this game, bar a small holding in NCYF.
It (NCYF) has generated a total return of -2%, +9.5% and +21.5% over 1, 3 and 5 years.
VAGP (global govt bonds, inv grade corps) produced Total Return -14.5% and -12.5% over 1 and 3.
Will the risk continue to be worthwhile? Don't know, quite possibly not in fact, but it's done a job to date.

As a point of detail, SMIF total Return over the last 1 year is -21.5%.
Your quoted -27% ignores the income bit, the bit that you were drawing attention to.

But...not at all sorry I don't hold it though!



Benchmarking is best done against similar funds. Credit risk is priced. When there's a default it hits straight through to NAV. We would all be wealthy if all that required to be a successful investor was hindsight.
Back to top Quote
1 user thanked Thrugelmir for this post.
Harry Trout on 08/10/2022(UTC)
Jimmy Page
Posted: 07 October 2022 21:31:50(UTC)
#70

Joined: 11/11/2017(UTC)
Posts: 1,686

Thanks: 6527 times
Was thanked: 3960 time(s) in 1251 post(s)
Thrugelmir;241881 wrote:
Jimmy Page;241880 wrote:
Logic Prophets;241878 wrote:
Bulldog Drummond;241870 wrote:
Logic Prophets;241812 wrote:
Anyone working on a SWR of 4% (rule of thumb) in retirement might be quite happy to take advantage of the 4 - 4.5% available on some of the gilts dated between now and the next 20years or so.
Providing you are happy to stay the course, it’s almost the safest way of guaranteeing that at least proportion of your portfolio is meeting your retirement income and you can simply forget about it and take the coupons twice a year.
.

Could this be the very same Logic Prophets who threatened to follow me all around the forum to warn all that my thoughts on bonds were guaranteed to lose money? NB gilts have been a bloody disaster, as predicted. Junk has done okay, also as predicted.


That is a totally false statement but as you wanted to engage (or should I say ‘snipe’) your bond fund ‘SMIF’ is down 27% so I don’t think that you have any authority to advise anyone on this subject.

I was wrong to think that staying away from the forum for a few months would allow sleeping dogs to lie but nope…. still wide awake and restless.

I've no particular skin in this game, bar a small holding in NCYF.
It (NCYF) has generated a total return of -2%, +9.5% and +21.5% over 1, 3 and 5 years.
VAGP (global govt bonds, inv grade corps) produced Total Return -14.5% and -12.5% over 1 and 3.
Will the risk continue to be worthwhile? Don't know, quite possibly not in fact, but it's done a job to date.

As a point of detail, SMIF total Return over the last 1 year is -21.5%.
Your quoted -27% ignores the income bit, the bit that you were drawing attention to.

But...not at all sorry I don't hold it though!



Benchmarking is best done against similar funds. Credit risk is priced. When there's a default it hits straight through to NAV. We would all be wealthy if all that required to be a successful investor was hindsight.

Benchmarking.
Irrelevant in this case. The conversation was comparing apples with oranges. A readily available 'fund' of junk bonds has significantly beaten a readily available 'fund' of inv. grade bonds over last few years, in both dividends generated AND Total Return.
Credit risk. Default. 'Fund' NAV.
All covered by Total Return of 'fund'. Risk/ reward a feature of every investment choice.
Hindsight..
Patronising of course, but more importantly, irrelevant comment.
Back to top Quote
 |  Edit by user
1 user thanked Jimmy Page for this post.
Harry Trout on 08/10/2022(UTC)
Bulldog Drummond
Posted: 08 October 2022 11:35:06(UTC)
#72

Joined: 03/10/2017(UTC)
Posts: 6,253

Thanks: 2935 times
Was thanked: 11838 time(s) in 4405 post(s)
Harry Trout;241872 wrote:
Bulldog Drummond;241870 wrote:
Junk has done okay, also as predicted.


Hi Bulldog

I've added several things to Mrs Trout's "low volatility" bucket in the last 12 months and nothing I've tried has retained it's capital value, in fact I'm not sure anything has shown a positive total return since purchase either.

Be interested to know what "junk" you own has done ok please, perhaps I should dip a toe there too.

Cheers

Harry

The ones I have are below, but there are of course others in the space. These are not recommendations, but for anyone considering fixed income I think that junk bonds/credit is at least worth a look and to my mind is better value than gilts. By way of comparison, looking at risk-free bonds, the Vanguard U.K. Inflation-Linked Gilt Index Fund is down 27% over the same period and U.K. Gilt UCITS ETF (VGOV) down 26%. The U.S. Government Bond Index Fund is down 14%. Meanwhile, I continue to get a solid income stream from monthly and quarterly dividends and am reasonably confident that the prices will come back up again. Junk is much less sensitive to interest rates than gilts.

PF allocation/12 months total return
BIPS (7%) -19%
RECI (2%) -6%
SMIF (7%) -20%
Royal London Global Bond Opportunities (5%) -9%
Back to top Quote
 |  Edit by user
3 users thanked Bulldog Drummond for this post.
Harry Trout on 08/10/2022(UTC), Apostate on 08/10/2022(UTC), Peter59 on 16/10/2022(UTC)
Apostate
Posted: 08 October 2022 12:07:38(UTC)
#76

Joined: 02/04/2018(UTC)
Posts: 2,287

Thanks: 618 times
Was thanked: 3643 time(s) in 1491 post(s)
Bulldog Drummond;241927 wrote:
Harry Trout;241872 wrote:
Bulldog Drummond;241870 wrote:
Junk has done okay, also as predicted.


Hi Bulldog

I've added several things to Mrs Trout's "low volatility" bucket in the last 12 months and nothing I've tried has retained it's capital value, in fact I'm not sure anything has shown a positive total return since purchase either.

Be interested to know what "junk" you own has done ok please, perhaps I should dip a toe there too.

Cheers

Harry

The ones I have are below, but there are of course others in the space. These are not recommendations, but for anyone considering fixed income I think that junk bonds/credit is at least worth a look and to my mind is better value than gilts. By way of comparison, looking at risk-free bonds, the Vanguard U.K. Inflation-Linked Gilt Index Fund is down 27% over the same period and U.K. Gilt UCITS ETF (VGOV) down 26%. The U.S. Government Bond Index Fund is down 14%. Meanwhile, I continue to get a solid income stream from monthly and quarterly dividends and am reasonably confident that the prices will come back up again. Junk is much less sensitive to interest rates than gilts.

PF allocation/12 months total return
BIPS (7%) -19%
RECI (2%) -6%
SMIF (7%) -20%
Royal London Global Bond Opportunities (5%) -9%


it's the fact that they've fallen so much that makes buying individual gilts so attractive at the moment. Buy one at less than 5 years in duration and hold to maturity you're guaranteed to get it back at a greater capital value. You'll also pick up dividends in the meantime.
Back to top Quote
1 user thanked Apostate for this post.
Harry Trout on 08/10/2022(UTC)
Harry Trout
Posted: 08 October 2022 12:53:29(UTC)
#73

Joined: 08/06/2014(UTC)
Posts: 1,012
Bulldog Drummond;241927 wrote:
Meanwhile, I continue to get a solid income stream from monthly and quarterly dividends and am reasonably confident that the prices will come back up again. Junk is much less sensitive to interest rates than gilts.

PF allocation/12 months total return
BIPS (7%) -19%
RECI (2%) -6%
SMIF (7%) -20%
Royal London Global Bond Opportunities (5%) -9%


Thanks Bulldog

Apologies if this seems nosey not for the first time but I'm curious what role you see this 21% of your portfolio playing?

In other words, you seem to like the income but I think you've mentioned being a high earner in other posts?

In our quest to get our unearned income > expenses I dabbled a bit with SMIF in Mrs Trout's portfolio and may buy a little again, I like the holdings and the regular income. However, I doubt I would ever get anywhere the amount you have and we are retired?

At >8% yield SMIF is tempting but would want to be sure the dividend isn't being paid out of capital. Perhaps you've got yourself comfortable with that and can save me the work?

Hope this explains my curiosity and again trust I'm not coming across as nosey

Thank you

Harry
Back to top Quote
Bulldog Drummond
Posted: 08 October 2022 15:46:57(UTC)
#74

Joined: 03/10/2017(UTC)
Posts: 6,253

Thanks: 2935 times
Was thanked: 11838 time(s) in 4405 post(s)
Harry Trout;241939 wrote:
Bulldog Drummond;241927 wrote:
Meanwhile, I continue to get a solid income stream from monthly and quarterly dividends and am reasonably confident that the prices will come back up again. Junk is much less sensitive to interest rates than gilts.

PF allocation/12 months total return
BIPS (7%) -19%
RECI (2%) -6%
SMIF (7%) -20%
Royal London Global Bond Opportunities (5%) -9%


Thanks Bulldog

Apologies if this seems nosey not for the first time but I'm curious what role you see this 21% of your portfolio playing?

In other words, you seem to like the income but I think you've mentioned being a high earner in other posts?

In our quest to get our unearned income > expenses I dabbled a bit with SMIF in Mrs Trout's portfolio and may buy a little again, I like the holdings and the regular income. However, I doubt I would ever get anywhere the amount you have and we are retired?

At >8% yield SMIF is tempting but would want to be sure the dividend isn't being paid out of capital. Perhaps you've got yourself comfortable with that and can save me the work?

Hope this explains my curiosity and again trust I'm not coming across as nosey

Thank you

Harry

Broadly speaking the higher the yield, the higher the capital risk but potentially the higher return. As far as I know bond funds don't normally pay income out of capital, but you'd need to check the prospectus/accounts for that.

I like having an allocation in this space as an alternative to cash and risk-free bonds, and as a half-way house between those and equities. I also like having a tax-free income stream that I can redeploy. And being offshore, no Stamp Duty.
Back to top Quote
 |  Edit by user
1 user thanked Bulldog Drummond for this post.
Harry Trout on 08/10/2022(UTC)
Harry Trout
Posted: 08 October 2022 16:16:16(UTC)
#75

Joined: 08/06/2014(UTC)
Posts: 1,012
Bulldog Drummond;241970 wrote:
I like having an allocation in this space as an alternative to cash and risk-free bonds, and as a half-way house between those and equities. I also like having a tax-free income stream that I can redeploy. And being offshore, no Stamp Duty.


Ok, expensive income though. If you wanted an alternative to cash and risk-free bonds I wonder if you would look at Capital Gearing Trust and then sell tranches as other opportunities arise? CGT hammers SMIF on a total return basis since launch.

I have CGAR (the OEIC version of CGT) in Mrs Trout's pot. I'm not against SMIF at today's prices but long term holders are probably feeling it a bit in the last year.

Thank you for the replies Bulldog
Back to top Quote
1 user thanked Harry Trout for this post.
Lindisfarne on 08/10/2022(UTC)
Bulldog Drummond
Posted: 08 October 2022 16:30:55(UTC)
#89

Joined: 03/10/2017(UTC)
Posts: 6,253

Thanks: 2935 times
Was thanked: 11838 time(s) in 4405 post(s)
I think that people are probably sick to death of my views on CGT.
Back to top Quote
1 user thanked Bulldog Drummond for this post.
Harry Trout on 08/10/2022(UTC)
Harry Trout
Posted: 08 October 2022 17:59:36(UTC)
#90

Joined: 08/06/2014(UTC)
Posts: 1,012
Bulldog Drummond;241978 wrote:
I think that people are probably sick to death of my views on CGT.


My comment was rather tongue in cheek for you but well intentioned for a wider audience!!!

Have a good evening
Back to top Quote
Apostate
Posted: 08 October 2022 18:12:23(UTC)
#28

Joined: 02/04/2018(UTC)
Posts: 2,287

Thanks: 618 times
Was thanked: 3643 time(s) in 1491 post(s)
Mr Helpful;241087 wrote:
Some financial historian posit that the golden time to have bought Gov't debt was 1982 ..........

https://www.multpl.com/10-year-treasury-rate

but 1982 was also the time to have bought Global Stocks .............



the difference being of course the buyers of government debt knew exactly what their returns would be. The stock buyers could only guess.
Back to top Quote
1 user thanked Apostate for this post.
Harry Trout on 08/10/2022(UTC)
12 Pages«Previous page7891011Next page»
+ Reply to discussion

Markets

Other markets