Returning to veer a bit:It isn't necessarily worse, but in general, when we see folks advocating a *rolling* bond ladder, they seem to think they're getting some benefit unique to a ladder vs. funds with similar weighted average duration. In my opinion, there is no real benefit to the extra complexity and error risk of trying to roll your own bond fund via a rolling ladder. Even with treasuries. And for sure in munis or corporate bonds, where diversification matters, most investors should leave it to the pros.
I suspect that part of the issue is that for the folks recommending bond funds, the fact that bonds are for aiding in the portfolio's growth, and not for spending principal, is so obvious as to not need saying.
And for (some of) the folks setting up ladders for retirement, the fact that the bond's principal exists either to be spent, or to be waiting in readiness to be spent if it's needed, is so obvious as to not need saying.
So we don't say it, and we're arguing about bonds, but bonds with two different job descriptions.
Statistics: Posted by BirdFood — Mon Aug 26, 2024 7:27 pm — Replies 87 — Views 9456