With financial independence now roughly 15 years away, I have started shifting my portfolio towards a 60/40 allocation: 60% in equity index funds and 40% in bond index funds.
Cash vs high-yield bond funds. There is currently an interesting alternative to bond funds in the UK: fixed-term savings accounts with guaranteed interest rates approaching 5%. There are products sometimes referred to as “treasury deposits”, with no account charges or management fees.
I therefore decided to compare four bond funds in which I have invested with fixed-term savings accounts. One important consideration is that both investments can be hedged into different currencies.
I selected following bond index funds:
