(As a NRA, I might go to LSE rather than US, due to some tax issue.
Since I don't find any good tool with Ireland-domiciled ETF yet.
For discuss convenient, I'll use US-domiciled ETF below. So VWRD~VT, IUAG~BND.)
But recently I found this article :When Doesn't It Pay to Rebalance? - William J. Bernstein
It said:
Then, I went to Portfolio Visualizer to check the correlation between VT and BND. It was -0.1, almost zero correlation.It is clear from the above that the actual rebalancing bonus of a two asset portfolio is:
1. Increased by the volatility of each asset
2. Increased by a decreased correlation between each asset,
3. Decreased as the difference in long term returns increases, and
4. Decreased further if this return difference is maintained over a long period of time
I also check the EDV - Vanguard Extended Duration Treasury ETF. It was -0.42 with VT and 0.57 with BND. Correlations result
I also ran the Efficient Frontier: VT&BND and VT&EDV.
For 70/30 mix,
VT&BND got - Mean return: 10.79%, CAGR: 10.46%, StdDev: 12.19%.
VT&EDV got - Mean return: 12.35%, CAGR: 12.33%, StdDev: 11.67%.
It seems like VT&EDV would have better return with lower volatility. And plus better rebalancing bonus.
Since EDV aren't diversity enough. Only holding EDV as bond asset isn't so wise.
But maybe 70% VT, 15% BND, 15% EDV is a better choice rather than 70% VT, 30% BND? Am I right?