Hariseldon58 wrote:Lynx wrote:Happily Interactive Investor say that they can simply switch my Vanguard FTSE Global Index investment from income to accumulation.
I would welcome thoughts on the following. I am at somewhat of a loss how to pick between any one of the following for the bond aspect of my two-fund portfolio.
I like the short term duration of the following funds:
Vanguard U.K. Short-Term Investment Grade Bond Index Fund - Accumulation (fee 0.12%; ytm 1.3%; 3 avg year duration)
https://www.vanguardinvestor.co.uk/investments/vanguard-uk-short-term-investment-grade-bond-index-fund-accumulation-shares?intcmpgn=fixedincomeuk_ukshortterminvestmentgradebondindexfund_fund_link
Vanguard Global Short Term Bond Index Fund GBP Hedged (fee 0.15%; ytm: 1.1%; 3 year avg duration):
https://www.vanguardinvestor.co.uk/investments/vanguard-global-short-term-bond-index-fund-pound-sterling-hedged-accumulation-shares?intcmpgn=fixedincomeglobal_globalshorttermbondindexfund_fund_link
To what extent would an ETF be preferable? It would allow me to more rapidly convert from the bond investment to more of the equities investment.
If I want to go for a Vanguard ETF, the accumulation version of:
Vanguard Global Aggregate Bond UCITS ETF (fee 0.10%; tm: 1.5%; 7 year avg duration)
https://www.vanguardinvestor.co.uk/investments/vanguard-global-aggregate-bond-ucits-etf-gbp-hedged-distributing
That is 'VAGS' would seem appropriate.
@lynx
The idea of a simple two fund portfolio has merit, not sure either of the two funds selected is a minimal risk asset.
Short duration U.K. investment grade bonds have little interest rate risk but do have significant credit risk in bad times, in good times the credit risk is minimal but when bad time’s strike then you have significant credit risk.
The global aggregate bond, has more interest rate risk and less credit risk but given it contains a mix of negative yield bonds and junk bonds plus all those in between ...
How about NS&I income bonds, duration is pretty much zero, full faith of U.K. government and interest rate just over 1%
Income Bonds interest rate is due to fall to 0.7% soon. Will be moving mine elsewhere, Hargreaves Lansdown's active savings has instant access rates at about 1.1% to 1.2%.