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What's the point of bond funds?
Rookie Investor
Posted: 17 February 2025 20:09:29(UTC)

Joined: 09/12/2020(UTC)
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Harry Gloom;334814 wrote:
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.


Definitely WB's views are worth more than even the experts on this forum.

Longer dated bonds require higher premium for the risks you take so the 5% or so for anything longer than 5-10 years seems unappealing.

But I suppose many multi asset funds have longer dated bonds. I personally do not use multi-asset funds and I only keep cash/bonds for meeting liabilities in the short/medium term. Anything longer it is just equities all the way.

Some people like to think of bonds/cash as reducing risk in terms of volatility and go for multi-asset funds for this. Nothing wrong with that per se but IMO there is less flexibility in doing so. Thinking in terms of buckets seems more logical and flexible.

Bonds funds by themselves seem pointless to me because you need to reduce duration at various stages, and it is annoying to do this. Better to pick individual gilts to meet future liabilities.
2 users thanked Rookie Investor for this post.
NPH on 17/02/2025(UTC), The Penguin on 17/02/2025(UTC)
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