Looking for bond etf that would not tank as stock etf holding for 10 years before starting to sell for expenses.
You should buy a Bond ETF with a duration of around 10, assuming you want to exit after 10 years. Do this and you have a return that is fairly predictable. If you choose an ETF with a duration of 5, then your 10 year return is nearly guaranteed. This is because bond returns are fixed income and nearly guaranteed (nearly because of credit risk) irrespective of the stock market over the duration.Are you happy with the performance of AGGG or I would rephrase do you think it would not tank as stocks?
Therefore AGGG seems appropriate for you because 1) its duration is around 6.5. 2) although it carries some credit risk, AGGG is the most diversified bond portfolio that exists to my knowledge.
p.s. I do consider myself a fixed income expert and as such I'm immune to the concept of bond ETFs rising/falling in value due to interest rate challenges (which correlate to stock market) or flight to safety during stock market crashes (which decorrelate with stock market) because over the course of the duration of the underlying bonds, the return of bonds that don't default is entirely fixed. So happiness of performance of bonds to me is irrelevant because I know the return of bonds before I buy them and they are predictable when held to maturity
Thus buying and holding AGGG for 10 years will with high probability and relatively low volatility will annually compound at around 3.5% year on year over 10 years.
At risk of sounding like I'm giving investment advice, the above statement assumes no widespread credit crunch on bonds and no bad luck on sudden interest rate movements around the time you want to exit. If you don't like these risks you can buy 10-year US government bonds, which have the lowest credit risk and have guaranteed ~3.9% return after 10 years no matter what interest rates or stock markets do
Statistics: Posted by glorat — Sun Sep 01, 2024 8:18 pm — Replies 38 — Views 7886