1Yr·

$N/A (+0.31%) The still very young, active bond-interest portfolio "FixedIncomeOne" by Dr. Andreas Beck looks good for the short term (1-3 years) as an overnight supplement, and contains many short-dated bonds.

Does this make it suitable as an investment reserve in a self-assembled/reconstructed GlobalPortfolioOne ?

.. Because in the GPO, A. Beck just last week re-bought bonds (return to normal "Regime A"), but with an average of 10 years maturity !

Which bond maturity is optimal now in the current market phase (with expected falling interest rates in 2024) ?

14 Comments

Stuttgarter81@Moneymoney

1Yr

If you speculate on interest rate cuts, then of course long-dated ones, since they offer the possibility of price gains in addition to the coupon. ...but of course it can be that interest rates only fall at the short end and not at the long end. If you just want to park your money - then definitely only short term. If you have a certain interest rate expectation, then you can speculate accordingly with longer-dated bonds.

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Alex@AlexBloch

1Yr

@Moneymoney Beck's investment reserve is such a middle thing: On the one hand, it is used for "short-term" parking until the next stock crisis, i.e. for up to 5 years, and on the other hand, it should contain bonds that should suddenly have the highest possible price gain precisely IN a global stock crisis (to compensate for and follow up on stock ETFs). Currently, he has bought a short and long term mix of US Treasury bonds... Should this be replicated in the same way in a "DIY GPO" ?

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Stuttgarter81@Moneymoney

1Yr

@AlexBloch I know the product 👍🏻... for me it is a little too expensive but Andreas Beck I find a good man. I put it together myself though. Short term in Euro government bonds and German Bunds. And long term in US government bonds partly currency hedged partly unhedged. The effective interest rate on the shorts is about 3.5 percent and on the longs 4.3 percent plus any gains/losses 🤷‍♂️😆- depending on how interest rates develop. I would liquidate the short-dated bonds if we see significantly lower share prices again. I rebuild my stock portfolio practically according to Portfolio One - with 6 ETFs.

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Kein Spekulant@randomdude

1Yr

@AlexBloch That would be too speculative for me, so I'm not convinced by this "middle ground. At present, 3.5% p.a. from $XEON should be enough. If interest rates fall again, you can always think about it.

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Alex@AlexBloch

1Yr

@Moneymoney I am also trying to recreate the GPO "simplified".... So far, I hold the 20% investment reserve in overnight money at 3.25%. Also because it's less than 100,000€ and still the deposit insurance kicks in. But lately I'm thinking more and more whether I should shift at least half of it now into bonds (ETFs), and which ones promise the best return in the next 1-2 years (assuming falling interest rates in the medium term) Does Beck currently mix the maturities to get to a duration of 10 years and "halve" the risk ? Or does he only buy bonds anyway, because he can't go into overnight money as a professional asset manager?

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Alex@AlexBloch

1Yr

@randomdude Yes, as long as overnight interest rates continue to rise toward 4%, I'll stick with them. But I assume that central banks will have lowered inflation as best they can by mid-2024, and then they will also have to lower interest rates to avoid creating a severe economic recession. Lowering interest rates means rising (long-term) bond prices, so it's a good investment opportunity. Beck recommends in his eBook for "normal" market phases inflation-protected longs, but currently we are not yet back in one, but the extraordinary interest rate hikes (and subsequent cuts) by central banks have shaken the system. And now it has to get back to normal...which can be a good entry point into bonds for that very reason.

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Kein Spekulant@randomdude

1Yr

@AlexBloch I think the latter. Kommer recommended short-dated German government bonds for years, even when private investors were only losing money with them. The guys have a slightly different perspective on some things. In general, small investors often seem to be at a disadvantage, but at least back then you could look for a call money account without penalty interest.

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Alex@AlexBloch

1Yr

@Moneymoney Which 6 ETFs are you using ?

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Stuttgarter81@Moneymoney

1Yr

@AlexBloch s&p 500, Europe, Japan, Em imi, Asia Pacific ex japan, small All World and as 7 Euro small

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Alex@AlexBloch

1Yr

The view on bonds is what fundamentally differentiates Beck and Kommer: Beck actively uses long-dated bonds that fit the market environment as an investment reserve in times of crisis, while Kommer passively uses short-dated bonds because they hardly fluctuate. Otherwise, they think the same: Globally max. broadly diversified, while Kommer primarily uses factors to get by with 2000 stocks as a model.

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Alex@AlexBloch

1Yr

I think I'll stay in 4% overnight money until at least the beginning of 2024, and then see how interest rates develop. Maybe temporarily in short-dated bonds, but at the latest when interest rate cuts are announced in long-dated government bonds. Quasi like Beck does it.

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Epi@Epi

1Yr

I would be cautious with long-dated bonds. Speculation can easily backfire if Germany or other countries are downgraded because of the interest rate hikes and the recession. I think it is quite likely that Germany will lose its AAA rating in the foreseeable future given its current economic policy. Even if no one really has that on their radar yet.

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