You know… I have been explaining to people I talked to about the default low-cost, diversified portfolio setup that they should have. Depending on your risk capacity (how much volatility you are able to take when you really experience volatility), you will have different percentages of equities to bond:

• X% invested in an unit trust or ETF that tracks MSCI All Country World Equity Index (E.g. VWRA traded on the LSE).
• 100% – X% invested in a unit trust or ETF that tracks the Bloomberg Global Aggregate Bond/Fixed Income Index (E.g. AGGUtraded on the LSE or the Amundi Index Global Aggregate Fund on Endowus).

In the past year, there is this niggling feeling in my mind that has been bothering me. If we want a bond allocation to complement other risk assets, do we really need the credit risk aspect that we get from having some investment-grade bonds given by the Bloomberg Global Aggregate Bond index? My conclusion is:...