tag:blogger.com,1999:blog-2875915890415125655.post2119074788302236724..comments2023-05-18T10:37:34.608+01:00Comments on <a href="http://www.retirementinvestingtoday.com">Retirement Investing Today</a>: Protecting Your Portfolio from Inflation – Index Linked Gilts (Linkers)RetirementInvestingTodayhttp://www.blogger.com/profile/03088383743670046657noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-2875915890415125655.post-24089210430933175162013-08-09T15:40:53.924+01:002013-08-09T15:40:53.924+01:00Hi all
interesting to read your comments re asset...Hi all<br /><br />interesting to read your comments re asset allocation and bonds.<br /><br />I tried to do some back testing over two periods: 2007-2012 to test against a crash and 2000-2012 to include the prior bull market.<br /><br />I divided the portfolio in the following asset classes:<br />Equities: (tried FTSE All-Share tracker & FTSE 250 tracker)<br />High-Yield Junk01noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-10394239619736301282012-09-02T15:21:07.113+01:002012-09-02T15:21:07.113+01:00Thanks for sharing.
Interesting that you're s...Thanks for sharing.<br /><br />Interesting that you're sitting on a lot of cash. I'm only carrying 6.1% of portfolio value in cash. Rationale here is that the real return is just so very negative after tax that in the long term I will just lose too much. I guess what I'm saying is that I'm seeing to much risk (of under performance)in cash today.<br /><br />Interesting the RetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-88938335929063773352012-09-02T11:19:17.209+01:002012-09-02T11:19:17.209+01:00Meant to write
5. In a crash correlation betwee...Meant to write<br /><br /><br />5. In a crash correlation between many asset classes rises dramatically. Therefore the benefits of diversification are lower than hoped for when they are most needed.<br /><br />Passive Investorhttps://www.blogger.com/profile/08535258693941313287noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-29090261481788143502012-09-02T11:08:18.671+01:002012-09-02T11:08:18.671+01:00Happy to share and it is helpful to focus my mind....Happy to share and it is helpful to focus my mind.<br /><br />I am not really being as tactical as it seems (no system) although I madea one-off decision to avoid normal gilts 4 years ago (see below). Aside from a significant cash cushion (covering several years of liabilities) I aim to be consistently around 50:50 equities : fixed income, going forward. <br /><br />My decision to avoid normalPassive Investorhttps://www.blogger.com/profile/08535258693941313287noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-57737100957356152352012-09-02T08:52:16.666+01:002012-09-02T08:52:16.666+01:00Hi Passive Investor
Thanks for sharing. From you...Hi Passive Investor<br /><br />Thanks for sharing. From your numbers it looks like about 45% of your total portfolio is in bonds (of all flavours) plus NS&I. That's a lot higher than my 22%. Given you say you are 10 years from retirement and targeting a lower allocation to bonds then I'm guessing you are playing a far higher tactical allocation game than I am? Are you having RetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-21902496215818179522012-09-01T20:41:09.901+01:002012-09-01T20:41:09.901+01:00Thanks for your kind comments RIT.
Thanks for the...Thanks for your kind comments RIT.<br /><br />Thanks for the kind comment RIT<br /><br />My current fixed interest allocation (aside from a cash buffer is)<br /><br />63% Linkers and NS&I index linked certs<br />11% Foreign Index linked government bonds (iShares SGIL)<br />15% UK corporate bond<br />7% ‘normal’ gilts<br />4% Euro high yield corporate - ‘for fun’<br /><br />I now have Passive Investorhttps://www.blogger.com/profile/08535258693941313287noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-27542598234090198332012-09-01T18:23:42.811+01:002012-09-01T18:23:42.811+01:00Hi Passive Investor
Thanks for engaging. An inte...Hi Passive Investor<br /><br />Thanks for engaging. An interesting view which adds real meat to the post and contributions so far. Particularly the tail risk protection.<br /><br />I'd be interested to know, given it sounds like almost an insurance policy for you, if all your low risk investments are Linkers or whether you are also buying corporate bonds and normal government gilts?<br /><RetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-55220436632923068592012-09-01T15:41:24.327+01:002012-09-01T15:41:24.327+01:00Oops typo in fourth paragraph
In 'normal'...Oops typo in fourth paragraph<br /><br />In 'normal' inflationary environments over the longish-term there should be little difference in the return from normal and index-linked gilts - sometimes inflation will be higher than market expectations (index linked gilts win) - sometimes inflation will be lower than market expectations (normal gilts win). Passive Investorhttps://www.blogger.com/profile/08535258693941313287noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-68264690245256248622012-09-01T15:34:50.646+01:002012-09-01T15:34:50.646+01:00Hi
A few observations in response to your posts
...Hi<br /><br />A few observations in response to your posts<br /><br />I have had similar concerns about inflation protection and the premium on linkers which as a result are nothing like as good an investment as NS&I index linked certs were.<br /><br />I now favour buying index-linked tracker funds (Vanguard / iShares) regularly. Although they clearly behave slightly differently in a Passive Investorhttps://www.blogger.com/profile/08535258693941313287noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-34555055199581280692012-08-30T21:34:34.581+01:002012-08-30T21:34:34.581+01:00Hi Anonymous
Thanks for the suggestion of Index L...Hi Anonymous<br /><br />Thanks for the suggestion of Index Linked Corporate Bonds. I'm not sure I'm prepared to go to that level of risk at this point. I set my Investment Strategy a long time ago and this portion was always based around low risk Government Bonds and NS&I Certs. That said, I am going to now head off and do a little more research on these as it's always nice to RetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-46939241545708862862012-08-30T08:50:26.541+01:002012-08-30T08:50:26.541+01:00Brother I share your pain :(
Right now I am proba...Brother I share your pain :(<br /><br />Right now I am probably overweight in index linkers for various tax related reasons and lucky timing in my buying<br /><br />I also hold some NS&I certs and I dread the day they will mature<br /><br />(by the way, issuing new NS&I certs at RPI +0.25% is entirely consistent with the latest long term issues of index gilts offering RPI +0.16%)<br /><brAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-19184961686281008902012-08-29T21:44:41.188+01:002012-08-29T21:44:41.188+01:00Hi Anonymous
Thanks for highlighting the potentia...Hi Anonymous<br /><br />Thanks for highlighting the potential premium risk associated with Index Linked Gilts if buying at this time. It's always difficult in these posts to know how far to go before readers glaze over. This one was more than twice the length of what I prefer to publish and already had started to descend into quite technical detail so I stopped.<br /><br />My problem at theRetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-21358776700645730102012-08-28T14:38:15.574+01:002012-08-28T14:38:15.574+01:00Hi RIT
I think you are missing a big difference b...Hi RIT<br /><br />I think you are missing a big difference between most index linked gilt issues and NS&I certs currently<br /><br />I hold both and I notice that all my index linked gilts trade at a big premium to the sum of the face value and index linking so far<br /><br />The only index linked gilts that don't trade at a huge premium are the 0.16% + RPI gilts just issued with Anonymousnoreply@blogger.com