1Mon·

Diversify portfolio

Are you toying with the idea of diversifying your portfolio with bonds?

What is your opinion on this? I would have $VUTY (+1.31%) in mind but I'm not sure whether a global government bond ETF wouldn't be better. Maybe someone already has one in their portfolio that they would recommend?

5 Comments

Dominik@Dominik_76

1Mon

Depends on what strategy you are pursuing? Yield or security component. You take currency risk and interest rate risk with $VUTY.

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Michael@FireSale

1Mon

@Dominik_76 In principle, I am assuming 2 things: 1. that interest rates will continue to fall in the USA because 2. economic growth will slow somewhat. Am I completely on the wrong track? Regarding your question: Is it acceptable to have a return or what do you mean by a security component? I always have currency risk and interest rate risk with bonds, don't I?

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Dominik@Dominik_76

1Mon

@FireSale You could be right, that's why it's interest rate speculation. Nobody knows whether it is the wrong way to go. So you can already reduce the risks mentioned, e.g. euro hedge and short term of the ETFs. This reduces the yield and you end up with a safety component (AAA euro government bonds, 3-month term or corp bonds, short term, 600 securities, IG). However, this is below the $XEON yield. Personally, I am also considering US Treasuries, but possibly 7-10 or EM gov bonds with a short maturity in euros. In my opinion, the risk is manageable.

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Michael@FireSale

1Mon

@Dominik_76 Thank you for your assessment. Yes, the return should definitely be more than $XEON otherwise I'll leave it in the call money account. Wouldn't it be better to take a Swiss franc hedge EM government bond ETF such as $EMBC (because my portfolio already consists of USD and EUR)?

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Dominik@Dominik_76

1Mon

@FireSale Interesting question ;-) I'm not sure whether it's a good solution to bring the CHF into the portfolio. Apart from the US currency of the shares, I have no other foreign currency.

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