I like bonds, my wife is a bond trader and therefore I hear about them every day. I have heaps of clients investing in bonds particularly high net worth. Bonds are generally a defensive asset and perform well in uncertain markets - there are graphs detailing the positive performance of bonds in the GFC v the negative return of shares. I invest in bonds and corporate bonds have a different return based on the company and duration. I have done very well - won't comment on my shares!) Cheers Ivan
Thanks for the comment Ivan. I often read there’s less guarantee of the above correlation benefit with corporate bonds compared to Gov’t Bonds as in when markets tank corporate bonds tend to behave more like equities. However not having invested in Bonds myself I would be interested to hear what you or your wife says if you asked the question? Do you have access to any charts showing how higher grade corporate bonds “as a group” behaved against equities during the GFC? FIIG publish plenty of info on bonds including the following supportive of corporate bonds over shares but I find some of their arguments selective and not surprisingly biased at times for obvious reasons: The difference between bonds and shares in a severe correction This is a very timely topic because with all the concern over loss of franking credit refunds yield hungry investors particularly SMSFs will be taking a much greater interest in higher yielding corporate bonds. There have also been a number of interesting ETFs in recent times investing in same such as: https://www.vaneck.com.au/library/vaneck-vectors-etfs/PLUS-fact-sheet.pdf https://www.betashares.com.au/files/factsheets/QPON-Factsheet.pdf https://www.betashares.com.au/files/factsheets/CRED-Factsheet.pdf https://api.vanguard.com/rs/gre/gls/1.3.0/documents/7627/au One day I’ve been meaning to read this comprehensive document from FIIG but haven’t got there yet: https://cuffelinks.com.au/wp-content/uploads/corpbondsmadesimple-24oct14_online.pdf
. Well it would still be fantastic if your wife could provide the chart I requested thanks? FIIG would surely have this data? I really would love to see how “Corporate” Bonds faired against Equities during the GFC. When it comes to Bonds my knowledge is mostly second hand from reading which tends to suggest that Corporate Bonds behave more like equities during major market downturns? It would be great if there’s evidence out there that this wasn’t the case in Australia during the GFC. FIIG like to publish this chart in regard to bonds vs equities: But herein lies the problem if using this in support of Corporate Bonds, there’s bugger all in that “Composite” index:
Interesting but seems more shorter term focused in trying to take advantage of dynamic asset allocation. However some evidence tends to suggest that dynamic vs static allocation is about as successful as active vs passive investing!
