galeno
Commander
KISS & STC
Posts: 221
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Post by galeno on Dec 25, 2020 23:18:04 GMT
Presently we use 3 bond ETFs. Equal parts of TIPS, US Treas, and Corp bonds. Eventually we'd like to simplify and go to 1 bond ETF. We'd LOVE to use USD-hedged world bonds. For the currency diversification. But in reality intermediate term US treasuries are still a better choice for us because of credit quality.
USD-hedged World Bonds (AGUG): 41% USD + 59% non-USD. ER = 0.10%. Duration = 7.2 yr. Credit Quality = A. Distribution yield = 1.48%. YTM = 0.80%.
Interm US Treasury Bonds (VDTY): 100% USD + 0% non-USD. ER = 0.07%. Duration = 7.1 yr. Credit Quality = AAA. Distribution yield = 1.57%. YTM = 0.60%.
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Post by chang on Dec 26, 2020 9:41:34 GMT
We'd LOVE to use USD-hedged world bonds. For the currency diversification. Any thesis for owning non-US bonds other than currency diversification? Every time I look at world bonds, I see nothing to attract me. I do like currency diversification but I obtain this through unhedged foreign equity. In fact, I have been shifting US → foreign equity this year specifically in anticipation of a weakening dollar.
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Post by steadyeddy on Dec 27, 2020 0:11:15 GMT
We'd LOVE to use USD-hedged world bonds. For the currency diversification. Any thesis for owning non-US bonds other than currency diversification? Every time I look at world bonds, I see nothing to attract me. I do like currency diversification but I obtain this through unhedged foreign equity. In fact, I have been shifting US → foreign equity this year specifically in anticipation of a weakening dollar. The duration of non-US bond funds tends to be longer than the US bond funds for the same "investment grade" credit quality; and even then the yield tends to be much smaller. For bond funds that hedge currency risk, very limited upside of returns (weak dollar has no benefit). So, not for me. I used to own BNDX but dumped it about a few months ago. As I expressed my views on non-US equities (on a separate thread), I do not own non-US stock funds either. Time may prove me totally wrong but I have home-country bias squared.
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galeno
Commander
KISS & STC
Posts: 221
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Post by galeno on Dec 29, 2020 22:03:12 GMT
We'd LOVE to use USD-hedged world bonds. For the currency diversification. Any thesis for owning non-US bonds other than currency diversification? Every time I look at world bonds, I see nothing to attract me. I do like currency diversification but I obtain this through unhedged foreign equity. In fact, I have been shifting US → foreign equity this year specifically in anticipation of a weakening dollar.
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galeno
Commander
KISS & STC
Posts: 221
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Post by galeno on Jan 21, 2021 21:59:12 GMT
We (wife and I) want to eventually go to a 2 fund port. 50% unhedged global equities + 45% USD hedged global bonds + 5% cash. We have 3 USD USA bond ETFs. We eventually want to go to 1 USD hedged global bond ETF.
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