What to buy?

A follow on question to my last blog post about timing re-entry to markets must be ‘what would you buy?’

At an asset class level, that is easy to answer: equities. With global interest rates back down to super low level, bonds will have served their defensive role and maybe do a bit more, but are not likely to be at bargain basement prices.

It is well known that although many fund managers can be criticised for not adding much value in rising markets when compared with the raw market indices, it is fairly easy to see that passive, index tracking funds and ETFs lose more money in falling markets. In other words most actively managed funds have at least some defensive characteristics.

It follows that passive global index tracker funds have probably sold off more than the sort of funds we own. I checked that out using the well regarded Vanguard Lifestyle Equity range and it is certainly true.

So as a quick way of getting exposure to equities while we wait and see what permanent changes are going to result from the current market crash (there are always some), buying into a global passives fund or ETF sounds like a good call to me.

I will write more about this after doing some detailed research.