1Sem.·

Compact summary on the topic of bonds💰

Don't be put off by the title of the video, as so often the lurid title only serves to generate attention. But the video is very good in my opinion!

In this video, the title refers to one aspect - corporate bonds for private customers like us - and there it is quite justified.

For those who are already familiar with bonds, the contribution is well categorized into chapters, i.e. you don't have to listen to everything. Can be listened to at 2.0 due to the speaking speed. Seen in this light, 18 minutes well spent🤓

https://youtu.be/wN4AIkh-eAM?si=DR2M1ApOv0rvyNNC

$XUHY (-0,44 %)
$VUCP (-0,46 %)

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10 Commentaires

Nacktdachs@DoppelSchlechtMinus

1Sem.

Thanks for the tip. But since you linked 2 ETFs on USD bonds of all things, you might want to watch the video again more slowly 😉

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Olli@Olli68

1Sem.

@DoppelSchlechtMinus Exactly 👍
I would also have linked to $EUHI.

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TomTurboInvest@TomTurboInvest

1Sem.

@DoppelSchlechtMinus @Olli68 You guys are eagle-eyed 😅 That was a test to filter out the attentive readers😁

No, joking aside! These two bond ETFs show exactly the currency risk, I've had both in my portfolio for a long time, that's why I linked them. They have brought and continue to bring me nice dividends (~6.5% and ~5.5%), but as the video explains, these currency fluctuations can eat up quite a bit of the return.

But, now that the USD is already at around 1.18, this could be an opportunity for risk-averse investors to take advantage of the currency effect in addition to the dividend. Provided, of course, that the USD strengthens again over the years. Just as people are now taking comfort in the fact that all World ETFs are currently "cheaper" due to the currency effect.
The reverse effect has contributed a great deal to the performance of investors in the eurozone in recent years, and the issue has tended to be swept under the carpet, as it was positive, so just don't mention the risk.

For me, one of the take-aways from the video in relation to corporate bonds is that as a private investor in the corporate bond sector, you are in a good position with the bond ETF vehicle. A few years ago, I consciously took the currency risk for the higher dividends, and now I have to suffer a little. But it's also a learning 🤷‍♂️ But I'll just leave them in my portfolio, as they pay good dividends, and I assume that there will be a time after Trump and the USD will strengthen again.

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TomTurboInvest@TomTurboInvest

1Sem.

@Olli68 $EUHI is of course a euro alternative, but also has ~30% other currencies or companies from other currency zones in the package, and also does not protect against a drawdown - which has also been up to -20% in recent years.
It is important to always be aware of what you are doing and to consciously take risks or opportunities. If the risk materializes, it is annoying regardless of all the statistics on the probability of occurrence, but that's the stock market. Ultimately, it's always about weighing up the risks and opportunities.

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Olli@Olli68

1Sem.

@TomTurboInvest Well explained. Incidentally, until March/April I also only had dollar bonds in my portfolio. But then I switched to $EUHI and $EMBC. The dollar is still overvalued.

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TomTurboInvest@TomTurboInvest

1Sem.

@Olli68 You definitely did a better job than me in terms of timing. I let it run, well - so I'll let it continue to run. Realizing them today at or near the USD low makes no sense in my case. They are like the World ETF Hold positions for me.

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Olli@Olli68

1Sem.

@TomTurboInvest I have even CHF-hedged the World ETF since the end of last year. 🤣
But I'm also close to retirement and don't have as much time as you do. 👍

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Nacktdachs@DoppelSchlechtMinus

1Sem.

@Olli68 This may be an unpopular opinion, because the yield initially looks higher than with other bond segments, but I don't see HY and EM bonds as an enrichment for a halfway normal portfolio, even without currency risk. In most situations that lead to a risk-off dump on the stock market, more speculative bonds are sold off almost as much. Why should I accept the lower return potential of the bond market if I get so little decorrelation to the equity ETF in return? I would rather take the money and split it ~50/50 between equities and investment grade bonds if you want a comparable risk/reward ratio.
In the case of corporate bonds, I'd rather take something like $VECP or, in your case, probably something along the lines of "Global Corporate Bond CHF-Hedged" or something like that.

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TomTurboInvest@TomTurboInvest

1Sem.

@DoppelSchlechtMinus Ultimately, everyone has to see it in the overall context of their portfolio and investment approach. A wide variety of approaches can make sense.

PS: If you can use the benchmark function of GQ, then compare the $VECP you mentioned with the two from the post $XUHY and $VUCP 😬
Although mine have been battered by the currency this year, I'm still doing well with mine over a 3 / 5 or max view anyway, plus considerably more interest, which is not reflected in the price performance.
Without risk there is little on the stock market, even bonds can have "relatively" high volatility due to the yield curve, etc.

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Nacktdachs@DoppelSchlechtMinus

1Sem.

@TomTurboInvest For backtests with European ETFs, I can recommend https://curvo.eu/backtest/de, where you can see the total return and don't have to add it up yourself like with the Getquin benchmark.

If the return is more important than the decorrelation (i.e. vola: yes, but in which direction compared to the rest?), euro bonds are of course not so exciting. But then I would stay in the equity market or diversify elsewhere instead of taking a middle course with speculative bonds.

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