Written by David Fabian, November 21st, 2017
This week’s ETF column was spawned by a thought-provoking statement on Twitter from one of my favorite follows @econompic. He deftly pointed out the disparity in current yield between a risk-free savings account in the United States versus the paltry income derived from broad-based international bond ETFs.
For example, one can now easily earn 1.25% (or greater) in a savings or money market account versus the 0.73% current yield of the Vanguard International Bond ETF (BNDX). This exchange-traded fund is considered one share class of the broader Vanguard International Bond mutual fund series, which combined house over $94 billion in total assets.
Read the complete article at NASDAQ.com
Written by David Fabian, January 06th, 2017
A reader recently sent me a question asking why you would own a bond fund when interest rates are on the move higher. This type of sentiment is more than likely on the minds of many investors as they prepare for 2017 and evaluate adjustments to their asset allocation.
The short answer is that every diversified portfolio should have bond exposure to balance out the risk of other asset classes – i.e. stocks and commodities. Bonds have historically provided a shock absorber for the equity side of the portfolio and have not shown any signs of relinquishing that trait. Simply letting go of all your bond exposure will unnecessarily tilt your risks and returns towards a single outcome. Read more
Written by David Fabian, June 14th, 2016
The Federal Reserve has been threating to raise interest rates for a number of months now and ETF investors have opted to call their bluff. After being burned by the chase for high yield through risky and esoteric asset classes, the focus has now turned towards enthusiasm for plain-vanilla bond funds.
A check of the year-to-date fund flow tracker at ETF.com shows a willingness to gobble up diversified U.S.-focused bond indexes such as the iShares Core U.S. Aggregate Bond ETF (AGG), iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD), and Vanguard Total Bond Market ETF (BND). Together these three funds have accumulated over $12.5 billion in new inflows since the beginning of 2016 and have easily distanced themselves as the top bond ETFs in terms of total size.
Written by David Fabian, October 07th, 2015
The search for income is always an interesting investment dynamic. Those that stray too far out into high yield or esoteric securities tend to find themselves experiencing above-average volatility or non-correlated returns. Conversely, if you stay too conservative in duration or credit quality, your total return is likely to be measured in pennies rather than percentage points. The nexus of those two extremes is ultimately the sweet spot that will produce dependable income and steady returns. Read more
Written by David Fabian, September 16th, 2015
Just when you thought all of the rising rate chatter from 2013 was but a distant memory, the investment community is once again dredging up strategies to shelter your portfolio from the ticking time bomb known as your bond funds.
Ok, that last part was a little dramatic. Yet, that’s how the media and many opportunistic experts have positioned their message as we stare into the abyss of the most important Fed decision in the history of human kind. Read more