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What's the point of bond funds?
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Aminatidi
Posted: 17 February 2025 11:59:14(UTC)
#101

Joined: 29/01/2018(UTC)
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Just to be clear I didn't post the 60/40 table as something that's supposed to be "anti bond".

I just think 2022 unnerved a lot of people who saw bonds as "safe" and who didn't realise bonds could do that especially as quickly as they did.

Seeing your life savings lose 22% very quickly when almost half of it is in "safe" assets will unsettle a lot of people IMO 👍🏼
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2 users thanked Aminatidi for this post.
dlp6666 on 17/02/2025(UTC), NPH on 17/02/2025(UTC)
Wave Action
Posted: 17 February 2025 12:55:16(UTC)
#102

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Most of the RED years on page 10 in 60/40 table are a mirror image of SP 500 stock falls again in RED. Realistically if the markets fall10% then 60/40 will be a 6% fall. Bonds would have to take up the slack .



Most bond years are in single figures. Just got to accept a few bad years that's the nature of the game.
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2 users thanked Wave Action for this post.
Jed Mires on 17/02/2025(UTC), Dentmaster on 17/02/2025(UTC)
Thrugelmir
Posted: 17 February 2025 13:20:54(UTC)
#106

Joined: 01/06/2012(UTC)
Posts: 5,317
% Returns in US $ aren't much use to a UK investor who trades in £.
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Jed Mires
Posted: 17 February 2025 15:15:16(UTC)
#107

Joined: 04/04/2023(UTC)
Posts: 338
Thrugelmir;334791 wrote:
% Returns in US $ aren't much use to a UK investor who trades in £.



Absolutely correct just add some extra onto the returns to compensate for the pounds long decline against the dollar.
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Harry Gloom
Posted: 17 February 2025 15:53:51(UTC)
#109

Joined: 01/12/2022(UTC)
Posts: 389
Jed Mires;334797 wrote:
Thrugelmir;334791 wrote:
% Returns in US $ aren't much use to a UK investor who trades in £.



Absolutely correct just add some extra onto the returns to compensate for the pounds long decline against the dollar.


A US Treasuries Fund such as Vanguard's VUTA would a good hedge against a market crash if the trend of money flocking to the USD in times of market stress continues, look at the chart and note March 2020:

chart
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NPH
Posted: 17 February 2025 15:56:37(UTC)
#103

Joined: 26/01/2014(UTC)
Posts: 59
Sorry, repeated post
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NPH
Posted: 17 February 2025 16:03:15(UTC)
#104

Joined: 26/01/2014(UTC)
Posts: 59
Wave Action;334789 wrote:
Most of the RED years on page 10 in 60/40 table are a mirror image of SP 500 stock falls again in RED. Realistically if the markets fall10% then 60/40 will be a 6% fall. Bonds would have to take up the slack .



Most bond years are in single figures. Just got to accept a few bad years that's the nature of the game.



As a retiree with 20 years+ of drawdown payments to come, my question is whether it is more effective to go
a) 4 years of MM/STFI to cover immediate cash and the rare 2-3 years down years in a row, balance in equities or
b) 1 year cash and balance 60/40, which means the downs won't be as down but the more frequent ups won't go as high
I appreciate there have been decades where gilts have outperformed but this is not '74 and interest rates are not 8%. As I have been told, we must start from today.
And if the answer is "it's whatever let's you sleep at night", that's fine.
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Harry Gloom
Posted: 17 February 2025 16:27:30(UTC)
#110

Joined: 01/12/2022(UTC)
Posts: 389
For what it's worth Warren Buffet has never been an advocate of longer dated bonds (apart from when you could lock in long term rates of 15% or so). He prefers short term bills (cash equivalent) and stocks at current rates.

Not sure is his views are worth more or less than the expert views on this forum though.

I have preferred to keep risk-off as cash and risk on as passive equity funds, no bonds to date.
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6 users thanked Harry Gloom for this post.
Newbie on 17/02/2025(UTC), Rob B on 17/02/2025(UTC), Big boy on 17/02/2025(UTC), Joe P on 17/02/2025(UTC), Jesse M on 17/02/2025(UTC), Rookie Investor on 17/02/2025(UTC)
Thrugelmir
Posted: 17 February 2025 17:21:20(UTC)
#108

Joined: 01/06/2012(UTC)
Posts: 5,317
Jed Mires;334797 wrote:
Thrugelmir;334791 wrote:
% Returns in US $ aren't much use to a UK investor who trades in £.



Absolutely correct just add some extra onto the returns to compensate for the pounds long decline against the dollar.


A lot has happened since 2007.
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Peanuts
Posted: 17 February 2025 19:54:29(UTC)
#105

Joined: 16/02/2019(UTC)
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NPH;334807 wrote:
Wave Action;334789 wrote:
Most of the RED years on page 10 in 60/40 table are a mirror image of SP 500 stock falls again in RED. Realistically if the markets fall10% then 60/40 will be a 6% fall. Bonds would have to take up the slack .



Most bond years are in single figures. Just got to accept a few bad years that's the nature of the game.



As a retiree with 20 years+ of drawdown payments to come, my question is whether it is more effective to go
a) 4 years of MM/STFI to cover immediate cash and the rare 2-3 years down years in a row, balance in equities or
b) 1 year cash and balance 60/40, which means the downs won't be as down but the more frequent ups won't go as high
I appreciate there have been decades where gilts have outperformed but this is not '74 and interest rates are not 8%. As I have been told, we must start from today.
And if the answer is "it's whatever let's you sleep at night", that's fine.


Remember the charts above are US based so over the next 20yrs will almost certainly be higher than what we will achieve in the UK so it’d be worth trying to find the equivalent in UK numbers (not sure I’ve seen 100yrs of data for a UK investor). But yes if maximum drawdown of a 60/40 has been 2yrs it gives you something (simple) to work too.
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Jed Mires on 17/02/2025(UTC)
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