Some of this will be specific to my own situation, some may be of interest to others - people are welcome to consider the whole or just those bits which are relevant to them. The inciting factor is discussed here
- https://www.lemonfool.co.uk/viewtopic.php?f=31&t=40877, with further details here
https://markets.ft.com/data/announce/detail?dockey=1323-16151671-1132MIMJLAVD3MAF7GFG4O7UKI
The first question is what to do with existing HDIV holdings, which might also morph into a when question (if not waiting until then end and taking one of the two default options). My current instinct is to wait until the end and then take the option of NAV - 1%. I'll need to figure out how to specify that within an ISA holding at II. If I lose confidence in that process, then I might wait until near the end, when hopefully the price will have converged to near its final value (from a 10%'ish discount to NAV at point of announcement) and then sell on the open market.
Either way above, I'll likely have some cash to reinvest early'ish next year. Ideally, I would prefer to invest like for like, but the nearest thing is BIPS and we already hold that in both our SIPPs and the kids JISAs. It's wouldn't be the end of the earth to further concentrate on BIPS, but I'd probably prefer not to all other things being equal. Another plausible investment trust option is NCYF, but that has a higher ongoing charge and is on a premium to NAV - once again, it doesn't feel quite right.
Another option again is to look for an ETF rather than an investment trust. I can't find a UK Vanguard one that suits, so the next cab off the rank would appear to be an iShares one: GHYG (the "iShares Global Corporate Bond UCITS ETF") would seem to be the closest to fitting the bill. As it happens, HDIV (and BIPS) hold some investment grade instruments, which GHYG doesn't, but arguably that's an existing problem for me, in that it slightly overlaps with VAGP. In one sense, this would "correct" that.
Were I to go down the GHYG route, there might be a tangentially related case for swapping (also within the ISA) VWRL & VAGP for IWDG & ABGP (their iShares equivalents). Not that I think Vanguard is likely to collapse, but, I suppose, there is a case to diversify within providers.
The final possible tweak down the ETF route is to add some Emerging Market bond exposure - the iShares product being EMHG (the "iShares J.P. Morgan $ EM Bond UCITS ETF"). Were I to go with this, Carver recommends 25% risk weight, which works out to about 20% cash weight. So, in the most extreme set of adjustments I might make, the ISA's would move from approximately
- MWY: 32% (Active Global Equities)
VWRL: 32% (Passive Global Equities)
VAGP: 24% (Passive Developed Global Investment Grade Bonds)
HDIV: 12% (Active Developed Global [mostly] High Yield Bonds)
to
- MWY: 32% (Active Global Equities)
IWDG: 32% (Passive Global Equities)
AGBP: 19% (Passive Developed Global Investment Grade Bonds)
GHYG: 10% (Passive Developed Global High Yield Bonds)
EMHG: 7% (Passive Emerging Global Bonds)
So, I'm not sure what to do and perhaps perversely, I'm inclined to go one extreme or the other - simply take the risk with BIPS, or rejig the whole thing as above.
As noted, thoughts on parts or all of the above welcome.
Regards, Newroad
