ETF Recommended index funds ?

A Bond ETF holds multiple bonds within, of course, those individual bonds will mature and the fund then reinvests in newer ones.

The Bond ETF maintains a "constant maturity", which is the weighted average of the maturities of all the individual bonds within the portfolio

Here's the maturity allocation for VGB

 

Everything I read says if you are going to invest in bonds, short term only at the moment - ie 1 maybe 2-3 year maturity, otherwise risk capital loss unless you can hold till maturity / forever in which case - what' the point of bonds - aren't they intended to be a buffer to draw down on in the case of capital loss of equity portion of investments? Disclaimer - I'm short bonds (hold debt)

 

What you said is true only if you are buying bond yourself but when buy through ETF the fund manager obviously manage buy/sell task of the bond to make sure capital is not lost IMO.

 

Some other options to consider if going with more than one fund
1) DHHF plus a separate bond fund
2) Roll your own via individual ETFs Eg VAS, VGS, VGE, a bond fund

By going multiple funds you are already taking on a rebalancing responsibility so might as well pick funds without the minor issues in the vanguard funds (Eg tax inefficiencies)

 

I seriously doubt this.

 

As an alternative to bonds, what do people here think of hybrids or debt securities? Betashares offers a hybrid fund etf which is actively managed (HBRD) and seems to offer a higher income than bond etf.

 

I was under impression that Vanguard or similar big fund normally buy bonds directly from government so their principal is secured, as on maturity they get their principal like everyone else.

I couldn't find any written article about ETF bond loose principal invested in underlying bonds.

 

Historically stocks and bonds are an example of uncorrelated assets with bonds providing safety in a portfolio.

Hybrid's higher income comes at higher risk and are more correlated to stocks, that is the underlying companies doing well and are not really an alternative to bonds.

 

losing bond principal isnt about who you buy from, but whether the bond issuer defaults.

 

Right. I’ve been putting “pen to paper” as it were recently with regards to looking at different instruments…..suffice to say hybrids, high yield debt, private debt etc doesn’t make the cut as investable ; equity like risk with tax inefficient return.

 

VGB example

The best Australian government bond ETF: BlackRock's IGB vs Vanguard's VGB vs BetaShares' AGVT

I have a % of bonds as you know, it helps me sleep at night

 

What is being contemplated here is not the risk of issuer default, but the marked to market loss of capital in the event that interest rates rise. Secondary market valuation will fall as the coupon (which is fixed) will be unattractive compared to new bond issues. Accordingly, the bond will trade at a price below its face value. In this case, if you need to sell you will realize a capital loss. If you do not sell you will be repaid face value (issue price) by the issuer at the time of maturity. Bond funds are constantly buying new bond issues as existing bonds reach maturity.

 

Understood what you explain but bond supposed to be long-term investment so should be okay if one can hold it... IMO.

In current market bank interest rate are going to go up so probably not worth investing in bond but better to put safety money in ubank (below$250k) to get at least safe return without loosing value if need to withdraw... iMO.

 

Now I’m burning to know what did make the cut as investable?

 

Ha. In the process of formalising long term investment policy, in doing so I have come to a list of permitted assets. Basically this is what makes the cut ;

(Core) Cash, Bonds, Listed Equities - Primarily cap weight index along with size and value factor ETF/funds in both Developed and Emerging markets, International listed Property, Microcap Active funds.

(Opportunistic) Direct investments in private companies incl Pre IPO, Australian unlisted commercial property, either small syndicate or direct.

That’s it.

 

Sure. If you need short term liquidity cash is the answer

 

Based on Sharesight share checker performance of few LIC and ETF. Obviously ETF in the image are for smaller duration then LIC so not apple to apple comparison.

If anyone knows any website other then sharesight which can provide similar comparison then appreciate if you can provide me the name. sharesight provided details below but i need to manually put into excel to create table which is not ideal if comparing multiple stocks.

as always past performance is not guarantee of future performance.

 

Vanguard Portfolio Builder is great for these sort of comparisons
https://www.vanguardinvestments.com...RGET=$SM$/advtools/portfolioanalytics/pa.html

 

Or....short term duration bonds, if you have a significant amount and don't need cash at hand, ie can wait 1 up to one year

I'm not holding bonds as a long term investment. My long term is always going to be equities - that's a risk I'm willing to take in my circumstances but probably not for most. Long term bonds might help with managing some volitiliy if you need that or per redwings dunno quote

"Diversification is the greatest protection against the unknown, i.e. just in case the future is different from the past."

Yes

 

Simple heuristic I’ve come to ; If you have debt of any kind, there is no place for bonds in your portfolio. A little cash perhaps, but not bonds.