Best way to get exposure to short dated Bonds

[Quint]

I often see referenece to holding a percentage of short dated bonds in a portfolio.

What is the best way for a retail investor to get this exposure. Holding direct or via a bond fund?

[AleisterCrowley]

I'm absolutely NOT an expert, but is this the sort of thing you mean?
https://www.ishares.com/uk/individual/e ... -ucits-etf
WHY ERNS?
Diversified exposure to very short maturity fixed and floating rate bonds issued in GBP
Direct investment in corporate bonds across sectors (industrials, utilities and financial companies) as well as in quasi-government bonds
GBP denominated investment grade bond exposure

[dspp]

An example might be

(wait 60 secs for the TLF mice to pant harder)

https://www.vanguardinvestor.co.uk/inve ... ion-shares

regards, dspp

[Alaric]

Holding direct or via a bond fund?

It depends on how much work you want to do. By their very nature short term holdings mature and have to be reinvested. A bond fund will do this for you, at a price of course.

[Quint]

Holding direct or via a bond fund?

It depends on how much work you want to do. By their very nature short term holdings mature and have to be reinvested. A bond fund will do this for you, at a price of course.

Exactly. Work Vs cost. For most would it be worth it or does it depend on the value of bond exposure.

[Quint]

I'm absolutely NOT an expert, but is this the sort of thing you mean?
https://www.ishares.com/uk/individual/e ... -ucits-etf
WHY ERNS?
Diversified exposure to very short maturity fixed and floating rate bonds issued in GBP
Direct investment in corporate bonds across sectors (industrials, utilities and financial companies) as well as in quasi-government bonds
GBP denominated investment grade bond exposure

Does this not provide anything other than somewhere to hold cash, at a small cost. No yield and little capital value fluctuation.

[Alaric]

Does this not provide anything other than somewhere to hold cash, at a small cost. No yield and little capital value fluctuation.

At current levels of interest rates, what more can be expected from short dated bonds?

[AleisterCrowley]

I'm absolutely NOT an expert, but is this the sort of thing you mean?
https://www.ishares.com/uk/individual/e ... -ucits-etf
WHY ERNS?
Diversified exposure to very short maturity fixed and floating rate bonds issued in GBP
Direct investment in corporate bonds across sectors (industrials, utilities and financial companies) as well as in quasi-government bonds
GBP denominated investment grade bond exposure

Does this not provide anything other than somewhere to hold cash, at a small cost. No yield and little capital value fluctuation.

It does provide a yield, just not very much- as you'd expect from short bonds in a low rate environment. I'm sure you could get more (and potentially lose more) with a basket of lower rated/longer term bonds

[Quint]

Does this not provide anything other than somewhere to hold cash, at a small cost. No yield and little capital value fluctuation.

At current levels of interest rates, what more can be expected from short dated bonds?

Just wanted confirmation that i was reading this right. Once costs have been removed i think i get a similar return from cash and premium bonds with less risk.

I have a very small amount in a strategic bond fund.

Which is what i do currently with circa 10% of my portfolio with the rest in equities. I think i will stick with this for the time being.

[dspp]

Does this not provide anything other than somewhere to hold cash, at a small cost. No yield and little capital value fluctuation.

At current levels of interest rates, what more can be expected from short dated bonds?

Just wanted confirmation that i was reading this right. Once costs have been removed i think i get a similar return from cash and premium bonds with less risk.

I have a very small amount in a strategic bond fund.

Which is what i do currently with circa 10% of my portfolio with the rest in equities. I think i will stick with this for the time being.

Re the "less risk" bit -

By being in cash + premium bonds your 10% reserve is 100% exposed to GBP risk. By choosing a bond allocation thoughtfully you could reduce / eliminate this GBP risk. If you think through the circumstances in which your 10% reserve might be called into play then you can decide whether this would be a helpful thing. It depends on your circumstances I think.

regards, dspp

[Quint]

At current levels of interest rates, what more can be expected from short dated bonds?

Just wanted confirmation that i was reading this right. Once costs have been removed i think i get a similar return from cash and premium bonds with less risk.

I have a very small amount in a strategic bond fund.

Which is what i do currently with circa 10% of my portfolio with the rest in equities. I think i will stick with this for the time being.

Re the "less risk" bit -

By being in cash + premium bonds your 10% reserve is 100% exposed to GBP risk. By choosing a bond allocation thoughtfully you could reduce / eliminate this GBP risk. If you think through the circumstances in which your 10% reserve might be called into play then you can decide whether this would be a helpful thing. It depends on your circumstances I think.

regards, dspp

I guess the less risk would refer to risk of loss of capital. I appreciate that the real value would be eroded by inflation, but i do not believe a short dated bond etf would fare any better.

My circumstances afford quite a bit of flexibility, hence the relatively small amout of non equities.

Thanks for the replies.

Quint

[Quint]

Rather than looking to bolster rewards from 'safe' (bonds), better to just reduce exposure to those and increase stock exposure if that is your desire (take the risk on the equity side, not on the bond side).

That is what i do currently and i think how i will carry on for the time being.