UK targeted PP

[SanMiguel]

What are the best ways to split up the PP in terms of UK ETFs?
25% into long term gilts
25% into short term gilts
25% into gold
25% in cheap UK FTSE tracker

Any suggestions for instruments to use?
I do not believe I can buy gilts inside my SIPP but there are some ETFs like IGLT that cover short and long term so could I just put 50% into the IGLT ETF?

[SanMiguel]

anyone?

[magneto]

In the absence of anyone else responding, am not PP compliant myself so am no expert, but the following may assist.

Long Term Gilts, iShares have nothing longer than IGLT.  Ideally buy 3.5% War Loan or similar undated if you can manage to SIPP.

Short Term Gilts, IGLS which is 0-5 years Gilts.  Would rather hold cash in forms such as NS&I IL Certs when they next become available.

Gold, PHAU.

FTSE 100 tracker, ISF, or if you want wider market and can stomach synthetics All Share XASX.

[gizmo_rat]

I don't have a SIPP, but on the face of it you'd expect to be able to buy gilts within them. However most brokers have poor systems support for gilt purchases so you have deal over the phone.

If you haven't already, it's worth ringing your broker to see what they can do rather than poke about on their website which can be misleading.

Vanguard have a U.K. Long Duration Gilt Index Fund but duration there is only 15 + years and Vanguard don't deal with all brokers.

For gold PHAU or PHGP ( phau is priced in $, phgp is in £). You might have access to one but not the other through your broker.

[stone]

San Miguel, the broker x-o lets you buy gilts online. I use the 50year gilt TR60 for my LTT. It is just as convienient as buying an ETF with them. I don't see any advantage in holding gilts via an etf rather than directly.

[magneto]

One other thought is that limiting stocks to UK only can be rather restrictive.  The world economy may thrive but UK stocks may not participate fully.  The argument that many UK companies trade globally is partly true for the FTSE100, but may not always apply in the long term.

Suggest some or major allocation of stocks to IWRD, which follows the MSCI World Index and covers the larger companies world-wide including a significant exposure (48%) to USA.

Any other views on international diversification from UK?

[SanMiguel]

I don't have a SIPP, but on the face of it you'd expect to be able to buy gilts within them. However most brokers have poor systems support for gilt purchases so you have deal over the phone.

If you haven't already, it's worth ringing your broker to see what they can do rather than poke about on their website which can be misleading.

Vanguard have a U.K. Long Duration Gilt Index Fund but duration there is only 15 + years and Vanguard don't deal with all brokers.

For gold PHAU or PHGP ( phau is priced in $, phgp is in £). You might have access to one but not the other through your broker.

What's the minimum amount a gilt can be purchased for, is it £10,000?
From my SIPP provider:
Please be advised that when buying Gilts you will be charged one dealing fee per trade no matter how large the deal.
So, each gilt is £1,000 - that's a lot of commission, which makes buying the ETF much much cheaper.

[stone]

From x-o, you can buy gilts in any amount I think. TR60 (50year gilt) costs £1.14 at the moment. I have previously bought amounts less than £2k I think. Certainly less than £10k. The x-o transaction charge is £5.65 or something like that. That seems to me to be the only thing making it folish to buy very small amounts (eg £10).

[gizmo_rat]

In theory, buying on the secondary market means you can have how much or little you want.

In practise if you are having to buy on the phone it seems to have a precision of ~ +/- £20 as they have to add accrued interest and presumably margin to the price they are quoted, all of which takes a few minutes.

However my experience is limited to buying in ISA's I've no idea if there are crazy SIPP rules.

[SanMiguel]

From x-o, you can buy gilts in any amount I think. TR60 (50year gilt) costs £1.14 at the moment. I have previously bought amounts less than £2k I think. Certainly less than £10k. The x-o transaction charge is £5.65 or something like that. That seems to me to be the only thing making it folish to buy very small amounts (eg £10).

Who are x-o - can;t find them.
But each gilt has a denominated amount usually £1,000.
10/1000 = 1% so each gilt will cost me 1% of the value, which hardly seems worth it for short term holdings at the current yields.

[stone]

SanMiguel, does this link work http://www.x-o.co.uk/?gclid=CLycvuDM1qsCFfIhtAodJAtEPA

They are the "no frills" internet only branch of Jarvis.

[SanMiguel]

In the absence of anyone else responding, am not PP compliant myself so am no expert, but the following may assist.

Long Term Gilts, iShares have nothing longer than IGLT.  Ideally buy 3.5% War Loan or similar undated if you can manage to SIPP.

Short Term Gilts, IGLS which is 0-5 years Gilts.  Would rather hold cash in forms such as NS&I IL Certs when they next become available.

Gold, PHAU.

FTSE 100 tracker, ISF, or if you want wider market and can stomach synthetics All Share XASX.

I think UUKX is cheaper than ISF by another 0.1%

[stone]

SanMiguel from what I can see the 50year gilt is £1.13 on the secondary market:
http://www.londonstockexchange.com/exch ... 5GBGBPUKGT

From what gizmo-rat said, possibly if you buy at an initial gilt auction, then perhaps you have to buy larger blocks.

[SanMiguel]

SanMiguel from what I can see the 50year gilt is £1.13 on the secondary market:
http://www.londonstockexchange.com/exch ... 5GBGBPUKGT

From what gizmo-rat said, possibly if you buy at an initial gilt auction, then perhaps you have to buy larger blocks.

No, that's just how bonds are represented. Regardless of market value they are always represented as 100.
So, a £1,000 nominal value gilt is 100 and
a £10,000 nominal value gilt is 100.
If they increase in value from 100 to 113 then that shows they have increased by 13%

Perhaps you can buy any amount you want though. They are shown in relation to £100 nominal but this doesn't mean you have to buy 10 gilts.

It's just that IGLT spreads the risk over many different maturities whereas TR60 is 8% for decades.

[stone]

SanMiguel, I just checked an actual order:
Buy  TR60.L  TREASURY L60    10,170.71  1.07280 GBP  11,000.00   

so for £11000 it bought 10170 for £1.07 each.

When I have bought them (with two different brokers) it has been in units of about £1 not £100 or £10000 or whatever. The annual ISA allowance is only £10700 or something so it would be impractical to set up a PP in an ISA if you had to buy in units of £10000.
 

[SanMiguel]

SanMiguel, I just checked an actual order:
Buy  TR60.L  TREASURY L60     10,170.71  1.07280 GBP  11,000.00   

so for £11000 it bought 10170 for £1.07 each.

When I have bought them (with two different brokers) it has been in units of about £1 not £100 or £10000 or whatever. The annual ISA allowance is only £10700 or something so it would be impractical to set up a PP in an ISA if you had to buy in units of £10000.
 

This seems strange though. I know it's all electronic now but what would people have done 40 years back? Gone home with 10,170 printed pieces of paper worth £1 each?
I have a SIPP, which does not have those limits, also any setup inan ISA would probably be in the order of £3,000 for each part of the PP and then build up cash again.

[gizmo_rat]

No, that's just how bonds are represented. Regardless of market value they are always represented as 100.
So, a £1,000 nominal value gilt is 100 and
a £10,000 nominal value gilt is 100.
If they increase in value from 100 to 113 then that shows they have increased by 13%

Not at all my area of knowledge but is that "contract for difference" pricing ?
Do you have a SIPP from a CFD supplier ?

[SanMiguel]

Does anyone actually hold a gilt on paper here?
Do they give you one confirmation showing total amount or is each gilt split up?

[magneto]

Gilt prices listed under £ are usually priced on pence, that is my experience with IL2016.

To be certain there is no misunderstanding tell your broker to spend x thousand pounds on the purchase.

[SanMiguel]

SIPP company have just confirmed that it costs £10 no matter how many gilts are bought.
So, then it remains to be seen whether IGLT and laddered bonds outperforms just a long term bond.
Maybe there is a way to replicate a laddered bond portfolio over the last 30 years vs the long term gilts at the time?