Which bond ETFs do you have?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
chasiu209
Posts: 106
Joined: Fri May 30, 2014 3:49 am

Which bond ETFs do you have?

Post by chasiu209 » Tue Jul 29, 2014 10:02 pm

Hi all

Quick poll - Which bond ETFs are you holding and why?

For me, I have 20% of my portfolio with bonds, with breakdown below. Comments appreciated!

Domestic US bond, short duration
6% VCSH Vanguard Short-Term Corp Bond ETF

Similar % allocation to TIPS vs US corporate bond
2% SCHP Schwab US TIPS ETF (Intermediate duration TIPS)
4% VTIP Vanguard Short-Term Inflation-Protected Securities ETF (short duration TIPS)

Intl bond - Chosen these due to their low duration vs other options
5% PICB PICB - International Corporate Bond Portfolio
3% IBND SPDR Barclays Capital International Corporate Bond ETF

Many thanks!
RC

User avatar
The529guy
Posts: 610
Joined: Fri May 23, 2014 1:08 am

Re: Which bond ETFs do you have?

Post by The529guy » Tue Jul 29, 2014 10:23 pm

You might enjoy the Bonds - Throw it all on the table!!! thread from earlier in the year, even though it is not ETF-specific. The three exclamation points are well-deserved.

In other news, I have no ETFs.

madbrain
Posts: 4959
Joined: Thu Jun 09, 2011 5:06 pm
Location: San Jose, California

Re: Which bond ETFs do you have?

Post by madbrain » Tue Jul 29, 2014 10:30 pm

Not a one.

Johm221122
Posts: 5072
Joined: Fri May 13, 2011 6:27 pm

Re: Which bond ETFs do you have?

Post by Johm221122 » Tue Jul 29, 2014 10:55 pm

None
Stable value, savings bonds and an income fund(less than5%)

John

placeholder
Posts: 3957
Joined: Tue Aug 06, 2013 12:43 pm

Re: Which bond ETFs do you have?

Post by placeholder » Wed Jul 30, 2014 12:55 am

All my fixed income holdings are in my 401k where ETFs are not available but stable value and low cost bond index funds are.

denovo
Posts: 4244
Joined: Sun Oct 13, 2013 1:04 pm

Re: Which bond ETFs do you have?

Post by denovo » Wed Jul 30, 2014 3:02 pm

BIV -interm bond index, nice and simple.
"Don't trust everything you read on the Internet"- Abraham Lincoln

User avatar
leonidas
Posts: 407
Joined: Sun Jul 10, 2011 8:58 am
Location: Mansfield Township, NJ

Re: Which bond ETFs do you have?

Post by leonidas » Wed Jul 30, 2014 3:41 pm

I own ITM in my taxible acct. Only mutual funds in retirement acct.

nyblitz
Posts: 354
Joined: Mon Apr 09, 2007 7:33 am

Re: Which bond ETFs do you have?

Post by nyblitz » Wed Jul 30, 2014 8:44 pm

ief, in an IRA.

As it holds nearly solely treasuries and has a high volume, it should be relatively liquid (as far as bond ETF's go) in a downturn.

It seems to mesh well with the rest of my fixed income.

User avatar
Chin00k
Posts: 52
Joined: Fri Jan 24, 2014 8:06 pm

Re: Which bond ETFs do you have?

Post by Chin00k » Wed Jul 30, 2014 9:22 pm

Vanguard Intermediate-Term Bond ETF (BIV)
Vanguard Total Bond Market ETF (BND)

RunningRad
Posts: 324
Joined: Wed May 21, 2014 2:06 pm

Re: Which bond ETFs do you have?

Post by RunningRad » Wed Jul 30, 2014 9:42 pm

I have a small BSV (short term bond) position in my Fidelity self-directed retirement account.
Few decisions in life motivated by greed ever have happy outcomes--Peter Bernstein, The 60/40 Solution

User avatar
nisiprius
Advisory Board
Posts: 36187
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Which bond ETFs do you have?

Post by nisiprius » Wed Jul 30, 2014 9:54 pm

None. In the first place, I don't like ETFs, and in the second place, there has been just enough said about potential problems specific to bond ETFs to make me think that even if you preferred to hold stocks as ETFs, you might still prefer to hold bonds in the form of a mutual fund.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

denovo
Posts: 4244
Joined: Sun Oct 13, 2013 1:04 pm

Re: Which bond ETFs do you have?

Post by denovo » Wed Jul 30, 2014 10:44 pm

nisiprius wrote:There has been just enough said about potential problems specific to bond ETFs to make me think that even if you preferred to hold stocks as ETFs, you might still prefer to hold bonds in the form of a mutual fund.

Link?
"Don't trust everything you read on the Internet"- Abraham Lincoln

stlutz
Posts: 4607
Joined: Fri Jan 02, 2009 1:08 am

Re: Which bond ETFs do you have?

Post by stlutz » Wed Jul 30, 2014 11:09 pm

Link?
There is sometimes a disagreement between how the market is valuing a particular portfolio of bonds at any given second vs. how those who calculate a mutual fund's NAV at the end of day think the value should be. With less liquid securities that often don't trade every day (e.g. most muni bonds), there isn't a right answer.

For those who are used to mutual fund prices, the divergence that ETF prices can show vs. an NAV calculation are disturbing. On the other hand, if all you've ever known is the ETF price, you'd say that those who are calculating the NAV don't know what they are doing, as there is nothing more "true" than the market price.

How and why these divergences occur are discussed in this article: https://advisors.vanguard.com/VGApp/iip ... F_PremDisc

chasiu209
Posts: 106
Joined: Fri May 30, 2014 3:49 am

Re: Which bond ETFs do you have?

Post by chasiu209 » Fri Aug 01, 2014 4:49 am

An interesting read I came across lately btw

http://etfdb.com/2011/qa-with-matthew-p ... fs-broken/

User avatar
nisiprius
Advisory Board
Posts: 36187
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

Re: Which bond ETFs do you have?

Post by nisiprius » Fri Aug 01, 2014 5:22 am

denovo wrote:
nisiprius wrote:There has been just enough said about potential problems specific to bond ETFs to make me think that even if you preferred to hold stocks as ETFs, you might still prefer to hold bonds in the form of a mutual fund.
Link?
Undoubtedly, the place where I'd have seen it would have been Rick Ferri's columns or postings. If you have or are considering bond ETFs you should actually read the articles, both of them, completely.

Why We Don't Buy Corporate Bond ETFs
Solving the Bond ETF Discount Problem

I have NOT paid much attention because it's irrelevant to me, but anyone seriously considering a major commitment to bond ETFs should be sure they understand just what the issue is supposed to be, what the size of it is, and how serious they think it is. It's a matter of there being occasional days when you can't sell your ETF for what it's worth, and apparently the real-world size of the problem can be on the order of a few percent. Maybe a long-term investor could shrug that off.

One of the things I've never "gotten" about ETFs is how there can possibly be a difference in value between the ETF and its NAV--as if the market put a different value between the whole and the sum of its parts. But it happens. A mutual fund is obligated to redeem shares at the end-of-day NAV. An ETF is just like a stock--you have to find an actual buyer willing to buy your shares. Rick Ferri explains it in the columns.

What's the scale of the problem? Here's the example he gives in the first article. The point is the gap between HYG price and NAV on 8/8/2011.

Image

Logically, the shares should have been worth $95 but on that day all you could get for them was $91.

It is as if the people actually willing to buy the shares at that particular moment in time were in effect saying "Yeah we know that share ought to be worth $95, and hey, any other day we'd be glad to buy it, but we're kinda short of the ready today and this particular package of securities isn't something we need. You'd be better off coming in here tomorrow, you would NOT believe how crazy things are around here today. I really hate to turn away business so we'll take it off your hands if you insist but all we can give you today is $91, take it or leave it."

Here are some snippets from the second article, and I've underlined some things.
Bond exchange-traded funds can be tricky to trade at times. Although these securities trade within a reasonable range of their net-asset value (NAV) most days, there are those periods when the ETF market just doesn’t want to cooperate. Last week was a good example. Here are two ways to solve this problem.

I have been writing about pricing issues with bond ETFs for quite some time, first in The ETF Book and later in articles such as Why We Don’t By Corporate Bond ETFs. Most of the time, there’s nothing wrong with bond ETFs or how they’re priced, as long as you’re not in a big hurry to trade during a big selloff in the market....

This brings us to the two ways to solve the bond ETF discount problem:
  • Don’t buy bond ETFs. Stick with traditional open-ended funds that trade at NAV at the end of the day. You won’t have to worry about ETF price swings due to liquidity issues and other matters.
  • If you do decide to invest in bond ETFs, don’t trade them during volatile days. Wait until prices recover before putting in your order. In the words of someone much wiser than me, this too shall pass.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

chasiu209
Posts: 106
Joined: Fri May 30, 2014 3:49 am

Re: Which bond ETFs do you have?

Post by chasiu209 » Thu Aug 28, 2014 11:38 am

perhaps a 'solution' would be to avoid the volatile days?

placeholder
Posts: 3957
Joined: Tue Aug 06, 2013 12:43 pm

Re: Which bond ETFs do you have?

Post by placeholder » Thu Aug 28, 2014 7:21 pm

chasiu209 wrote:perhaps a 'solution' would be to avoid the volatile days?
Can you provide a list of the upcoming ones?

chasiu209
Posts: 106
Joined: Fri May 30, 2014 3:49 am

Re: Which bond ETFs do you have?

Post by chasiu209 » Sun Sep 07, 2014 10:45 am

placeholder wrote:
chasiu209 wrote:perhaps a 'solution' would be to avoid the volatile days?
Can you provide a list of the upcoming ones?
Wouldn't be able to tell one between Monday to Friday!

Perhaps I could be sure weekends are probably 'not volatile' :) Best of luck.

jdb
Posts: 1410
Joined: Wed Dec 05, 2012 8:21 pm

Re: Which bond ETFs do you have?

Post by jdb » Sun Sep 07, 2014 11:21 am

None. And no plans to get one. I stick with the Vanguard Admiral class bond mutual funds with their low costs, primarily TBM and Limited Term Tax Exempt and TIPS and HY with some GNMA and intermediate tax exempt. Never saw a reason to acquire an ETF.

Billyboy
Posts: 202
Joined: Mon Mar 24, 2008 2:21 pm
Location: California

Re: Which bond ETFs do you have?

Post by Billyboy » Sun Sep 07, 2014 11:37 am

None! I use all Vanguard Bond mutual funds. No plans to use ETFs for either bonds or equities.

Post Reply