The quick answer is a higher income stream. I know people love to point out that at those infrequent times of portfolio stress, Treasuries do better. That is fine as far as it goes but I never fully understand this BH chestnut. Aren't we long-term investors?I don't think there is some maximum. It is more a matter of understanding lots of nominal bonds in taxable is not something to do lightly. You need a compelling reason for whatever amount you use above none.
Take the 10-year annual average returns for three funds I assume have similar durations going by their names:
VFIUX Vanguard Intermediate-Term Treasury Fund 1.81%
VFIDX Vanguard Intermediate-Term Investment-Grade Fund 3.22%
VWIUX Vanguard Intermediate-Term Tax-Exempt Fund 2.50%
BHers will say the non-Treasury funds had a higher risk, therefore the higher returns. Fine, but as a holder of those funds, where has that risk shown up over the whole period of the prior 10 years?
If the risk does not show up over a 10-year period, why would I not want to chose the bond funds with the higher returns?
Statistics: Posted by Ferd Burfel — Sun Nov 30, 2025 1:37 am — Replies 9 — Views 602