simoan wrote:vand wrote:That's true, I haven't talked about Index linked FI yet.
TBH I'm not that knowledgeable about them...
I don't invest in Personal Assets IT or the other "wealth preservation" trusts, but the commentary in the recent quarterly report is really worth reading, especially with regard to the behaviour of index linked bonds. The section entitled "The way things work: index-linked" is what I'm referring to: https://www.patplc.co.uk/Portals/0/Lite ... 202022.pdf
I personally have zero interest (see what I did there?) in bonds, although I still weakly hold a few preference shares as my only fixed income investments.
All the best, Si
Thanks, yes, that's what the Pensioncraft video is explains too. It makes sense, but with anything new just takes a while to wrap one's head around.
One also has to very relevantly ask: Is the Bond market any good at predicting inflation at all?
I present this evidence that the bond market is actually a lousy predictor of future inflation and that the expectation of inflation it sets is most highly correlate with a rear-view mirror of what past inflation has already happened, rather than what future inflation actually turns out to be...
https://www.piie.com/blogs/realtime-eco ... -inflation
"The first line of the table shows that a 10-year average of past inflation is the best predictor for US yields, with an R2 of 0.82. A one percentage point increase in past inflation raises the yield 1.11 percentage point. The current inflation rate has only a small effect of 0.18 percentage point... Thus, bond yields are not good predictors of inflation over any future horizon."