ETF Bond Ladders

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Wading Ashore
Posts: 556
Joined: Sat Feb 23, 2008 7:23 pm

ETF Bond Ladders

Post by Wading Ashore »

There have been articles about this product in Barron's and WSJ. Curious to know Bogleheads' thoughts about it . . .
Jack shall have Jill, nought shall go ill; the man shall have his mare again, and all shall be well.
Occupier
Posts: 284
Joined: Wed Feb 01, 2012 9:21 pm

Re: ETF Bond Ladders

Post by Occupier »

Never heard of it. My thinking is you should pick an average duration you are comfortable with and stick to it. Something in the 4-5 range is OK with me given the fact that yields are at historic lows and likely to go up at some unknown point and speed in the future. That can entail having both a short term and intermediate term bond fund, but not anything longer. Note with an individual bond your always going to get the bonds face value back at maturity, hence the utility of a ladder. But funds don't mature and pay off like an individual bond. Take a look at the NAV of Vanguard High Yield Bond Fund. It's gone down over the years with consistency (your reimbursed for this with the higher yield). So thinking of holding funds as a ladder makes no sense. Dave
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Rosebud
Posts: 386
Joined: Sun Feb 21, 2010 10:31 pm

Re: ETF Bond Ladders

Post by Rosebud »

A short snippet from WSJ "Investors Climbing Aboard ETF Bond Ladders":
"A way some advisers are looking to cushion an extended sell-off in fixed-income markets is by combining several target-maturity ETFs to cover a broad range of years. In that way, the funds act much like a bond ladder made up of individual securities."
http://online.wsj.com/article/SB1000142 ... EFTTopNews
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