TLT vs BND in portfolio.

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james7777
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TLT vs BND in portfolio.

Post by james7777 » Wed Nov 27, 2019 4:53 pm

I just changed my portfolio after doing backtesting and observing daily movements of TLT ( 20 year government bond fund with a 18.2 year duration) and BND ( total bond fund with a 6.2 year duration).

my previous portfolio was 40-50% VTI and 50-60% BND as my preferred asset alocation.. since BND has 1/3rd the duration of TLT it has 3 times the up moves of BND AND 3 times the down moves of BND.. TLT is like BND on steriods!. ( 3 times the interest rate risks). so lets look at my previous hypothetical portfolio:

$55000 BND
$45000 VTI

this is 55% BND and 45% VTI. since TLT gives me 3 times the gain and losses of BND only 1/3RD of bond $ are needed. here is what my current portfolio is with the same $100000 total:

VTI $71000
TLT $ 29000

this is 71% VTI and 29% TLT.

this latter portfolio gives me greater gains total, and less drawdown than the BND portfolio. whats your guys thoughts on this?

Explorer
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Re: TLT vs BND in portfolio.

Post by Explorer » Wed Nov 27, 2019 5:07 pm

Some food for thought:
- If and when interest rates rise, every 1% increase in rates would cause TLT to approximately lose 18% of its principal.
- if interest rates fall 1% from where they are now, TLT value will rise by approximately 18%

Can you afford that much of a swing in the bond values of your portfolio?

rascott
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Re: TLT vs BND in portfolio.

Post by rascott » Wed Nov 27, 2019 5:10 pm

My thought is those are two significantly different portfolios
...... what are your goals and timeframes?

retired@50
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Re: TLT vs BND in portfolio.

Post by retired@50 » Wed Nov 27, 2019 5:18 pm

I wouldn't use TLT in place of BND, but that's me. I prefer less volatility in my bond holdings. Best of luck to you.

Regards,

retiredjg
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Re: TLT vs BND in portfolio.

Post by retiredjg » Wed Nov 27, 2019 5:24 pm

james7777 wrote:
Wed Nov 27, 2019 4:53 pm
whats your guys thoughts on this?
I'm thinking that a long term bond, even a long term government bond, is not where I want my money to be when things go badly. Your original portfolio was better.

Your current idea has a lot more risk than what you had. It has a higher percentage of stocks and the bonds are riskier. Do you realize you have increased your risk?
Last edited by retiredjg on Wed Nov 27, 2019 5:28 pm, edited 1 time in total.

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Re: TLT vs BND in portfolio.

Post by danielc » Wed Nov 27, 2019 5:25 pm

james7777 wrote:
Wed Nov 27, 2019 4:53 pm
I just changed my portfolio after doing backtesting and observing daily movements of TLT ( 20 year government bond fund with a 18.2 year duration) and BND ( total bond fund with a 6.2 year duration).

my previous portfolio was 40-50% VTI and 50-60% BND as my preferred asset alocation.. since BND has 1/3rd the duration of TLT it has 3 times the up moves of BND AND 3 times the down moves of BND.. TLT is like BND on steriods!. ( 3 times the interest rate risks). so lets look at my previous hypothetical portfolio:

$55000 BND
$45000 VTI

this is 55% BND and 45% VTI. since TLT gives me 3 times the gain and losses of BND only 1/3RD of bond $ are needed. here is what my current portfolio is with the same $100000 total:

VTI $71000
TLT $ 29000

this is 71% VTI and 29% TLT.

this latter portfolio gives me greater gains total, and less drawdown than the BND portfolio. whats your guys thoughts on this?
Here's what I think:

1) You have made your portfolio A LOT riskier. You dramatically increased your stock allocation, and you replaced less risky bonds with riskier bonds.

2) I worry that your backtesting is misleading you. Over the last few decades interest rates have dropped dramatically and that has benefited bonds with longer durations. Today interest rates are near zero; there's no room for them to continue going down for the next few decades, and if they go up instead, long bonds will give you miserable returns with no improvement in volatility.

I think that the change you made is a bad idea.

EDIT: I also worry that you don't know what your financial goals are. As someone else noted, those two are dramatically different portfolios. The new one is A LOT riskier.

longinvest
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Re: TLT vs BND in portfolio.

Post by longinvest » Wed Nov 27, 2019 5:44 pm

james7777 wrote:
Wed Nov 27, 2019 4:53 pm
I just changed my portfolio after doing backtesting ...
If it was so easy... but it isn't. Unfortunately, past performance doesn't predict future returns.

The goal of Bogleheads investing isn't to win; it's to not lose. Broadly diversifying one's investments leads to boring average returns. But, that's exactly what Bogleheads are looking for: reliably getting average returns, guaranteeing that they'll never be losers!

A Bogleheads investor could do much worse than invest their entire portfolio into Vanguard's LifeStrategy Moderate Growth Fund (VSMGX), a low-cost globally-diversified balanced index* fund with a moderate amount of home bias. The use of such a One-Fund Portfolio greatly simplifies a portfolio, eliminates the need to rebalance, and sidesteps a long list of potential behavioral pitfalls.

* VSMGX is only an index fund since 2012; prior to that, it contained an active component.

Instead of trying to maximize portfolio performance by concentrating stocks into a single country and bonds into domestic government long-term bonds, an investor can simply spend a little less, adopt a boring Bogleheads portfolio, and reliably retire with dignity. This is a surprising outcome of the Mathematics of Retirement Investing. (The linked post is really worth reading).

Good luck!
Bogleheads investment philosophy | One-ETF global balanced index portfolio | VPW

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james7777
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Re: TLT vs BND in portfolio.

Post by james7777 » Wed Nov 27, 2019 5:45 pm

rascott wrote:
Wed Nov 27, 2019 5:10 pm
My thought is those are two significantly different portfolios
...... what are your goals and timeframes?
guys, let me do some better simpler math:

lets compare 3 different portfolios....EACH with $60,000 VTI, :

1) $60000 BND and $60000 VTI ( 50%/50%.)

2) $20000 TLT and $60000 VTI

3) $180000 SHY and $60000 VTI ( SHY is a 1-3 year gov bond with a 1.9 year duration)

NOTE!...my stock risk is ALL the same in all 3 portfolios.. my bond risk is the SAME in all 3 portfolios. SHY is 1/3rd as risky as BND and 1/9th as risky as as TLT hence TLT is only $20000 VS $60000 for BND and $180,000 for SHY.

BIG NOTE!: this is asuming that stocks and bonds move inversly to each other and dont move down together!. in 90 years there has only been 2 years where 10 year bonds and stocks have gone down together.

next those were hypothetical portfolios. in my real portfolio I kept stocks the same ammount and cut my bonds by 1/3rd using TLT, the 2/3rds that WERE in BND are now in cash earning 1.73% at a savings account in case of a crash. now do you see where Im better off? or am I still missing something?? THANKS!

dbr
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Re: TLT vs BND in portfolio.

Post by dbr » Wed Nov 27, 2019 5:59 pm

james7777 wrote:
Wed Nov 27, 2019 4:53 pm

$55000 BND
$45000 VTI


VTI $71000
TLT $ 29000


this latter portfolio gives me greater gains total, and less drawdown than the BND portfolio. whats your guys thoughts on this?
The latter portfolio gives you much greater expected return at much greater risk and much larger expected drawdown, as pointed out by another poster. Using data that includes big returns for TLT during a time a large decreases in interest rates could be very misleading. But portfolio visualizer even between 2008 and 2019 shows more return, more risk, and greater drawdown for the second portfolio.

Note that 45/55 VTI/BND and 71/29 VTI/TLT are possible rational porfolio choices but they are portfolios that are as different as night and day on all properties.

rkhusky
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Re: TLT vs BND in portfolio.

Post by rkhusky » Wed Nov 27, 2019 6:22 pm

james7777 wrote:
Wed Nov 27, 2019 4:53 pm
I just changed my portfolio after doing backtesting and observing daily movements of TLT ( 20 year government bond fund with a 18.2 year duration) and BND ( total bond fund with a 6.2 year duration).

my previous portfolio was 40-50% VTI and 50-60% BND as my preferred asset alocation.. since BND has 1/3rd the duration of TLT it has 3 times the up moves of BND AND 3 times the down moves of BND.. TLT is like BND on steriods!. ( 3 times the interest rate risks). so lets look at my previous hypothetical portfolio:

$55000 BND
$45000 VTI

this is 55% BND and 45% VTI. since TLT gives me 3 times the gain and losses of BND only 1/3RD of bond $ are needed. here is what my current portfolio is with the same $100000 total:

VTI $71000
TLT $ 29000

this is 71% VTI and 29% TLT.

this latter portfolio gives me greater gains total, and less drawdown than the BND portfolio. whats your guys thoughts on this?
Odd that you are increasing stock when substituting TLT for BND, as if stocks are less risky than bonds.

What would your plan be for transitioning to less risky bonds at retirement?

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james7777
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Re: TLT vs BND in portfolio.

Post by james7777 » Wed Nov 27, 2019 7:24 pm

I would probably put cash into a 1.75% savings account nearing retirement vs bonds. lets look at some more math on SHY, BND and TLT,:

$20,000 of TLT VS $60,000 of BND VS $180,000 in SHY:

interest rates go up 2% =

$7200 LOSS in TLT
$7200 LOSS in BND
$7200 LOSS in SHY

interest rates go down 1%

$3600 GAIN in TLT
$3600 GAIN in BND
$3600 GAIN in SHY.

I get the SAME amount of gains and losses from having $20,000 of TLT VS $60,000 BND OR $180,000 of SHY. this leaves me with more cash to trade with or save with while holding TLT vs BND or SHY. TLT is BND on steriods.

AHTFY
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Re: TLT vs BND in portfolio.

Post by AHTFY » Wed Nov 27, 2019 7:28 pm

james7777 wrote:
Wed Nov 27, 2019 5:45 pm
BIG NOTE!: this is asuming that stocks and bonds move inversly to each other and dont move down together!. in 90 years there has only been 2 years where 10 year bonds and stocks have gone down together.
What if interest rates rise and the stock market falls as a result, like in the 70s and early 80s?

Using the SIMBA spreadsheet, since 1871, long term treasuries and stocks have fallen together 23 times. In the last 90 years, it happened 12 times. Not sure where you are getting just twice.

rascott
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Re: TLT vs BND in portfolio.

Post by rascott » Wed Nov 27, 2019 7:34 pm

james7777 wrote:
Wed Nov 27, 2019 7:24 pm
I would probably put cash into a 1.75% savings account nearing retirement vs bonds. lets look at some more math on SHY, BND and TLT,:

$20,000 of TLT VS $60,000 of BND VS $180,000 in SHY:

interest rates go up 2% =

$7200 LOSS in TLT
$7200 LOSS in BND
$7200 LOSS in SHY

interest rates go down 1%

$3600 GAIN in TLT
$3600 GAIN in BND
$3600 GAIN in SHY.

I get the SAME amount of gains and losses from having $20,000 of TLT VS $60,000 BND OR $180,000 of SHY. this leaves me with more cash to trade with or save with while holding TLT vs BND or SHY. TLT is BND on steriods.

By this reasoning why stop at TLT? Buy EDV.... or even TMF.

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Re: TLT vs BND in portfolio.

Post by Alchemist » Wed Nov 27, 2019 7:48 pm

Your math is absolutely correct. If you are highly confident in this strategy I do not think it is crazy. However, the big danger here is unexpected inflation and/or rise in long term interest rates. If interest rates or inflation rise a few percent over the next decade, your portfolio will be permanently crippled because once those long term bonds lose value to inflation there is no way to get it back. Stocks can recover, eventually, from unexpected inflation. Long Bonds are wrecked permanently.

If you fully understand that is the risk you are taking, then by all means continue. I think there is a high likelihood you will succeed and a small chance of unexpected inflation. It is not what I would do, but there are many roads to Dublin.

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james7777
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Re: TLT vs BND in portfolio.

Post by james7777 » Wed Nov 27, 2019 7:56 pm

AHTFY wrote:
Wed Nov 27, 2019 7:28 pm
james7777 wrote:
Wed Nov 27, 2019 5:45 pm
BIG NOTE!: this is asuming that stocks and bonds move inversly to each other and dont move down together!. in 90 years there has only been 2 years where 10 year bonds and stocks have gone down together.
What if interest rates rise and the stock market falls as a result, like in the 70s and early 80s?

Using the SIMBA spreadsheet, since 1871, long term treasuries and stocks have fallen together 23 times. In the last 90 years, it happened 12 times. Not sure where you are getting just twice.
if interest rates rise AND stocks go down for an extended period we are all screwed who own stocks and bonds whether the bonds are TLT, BND or SHY.. . I will NEVER go 100% stocks, way too risky. we must own stocks and bonds.

AHTFY
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Re: TLT vs BND in portfolio.

Post by AHTFY » Wed Nov 27, 2019 8:04 pm

james7777 wrote:
Wed Nov 27, 2019 7:56 pm
AHTFY wrote:
Wed Nov 27, 2019 7:28 pm
james7777 wrote:
Wed Nov 27, 2019 5:45 pm
BIG NOTE!: this is asuming that stocks and bonds move inversly to each other and dont move down together!. in 90 years there has only been 2 years where 10 year bonds and stocks have gone down together.
What if interest rates rise and the stock market falls as a result, like in the 70s and early 80s?

Using the SIMBA spreadsheet, since 1871, long term treasuries and stocks have fallen together 23 times. In the last 90 years, it happened 12 times. Not sure where you are getting just twice.
if interest rates rise AND stocks go down for an extended period we are all screwed who own stocks and bonds whether the bonds are TLT, BND or SHY.. . I will NEVER go 100% stocks, way too risky. we must own stocks and bonds.
But you are more screwed with your new allocation than your old one.

rkhusky
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Re: TLT vs BND in portfolio.

Post by rkhusky » Wed Nov 27, 2019 10:10 pm

james7777 wrote:
Wed Nov 27, 2019 7:56 pm
if interest rates rise AND stocks go down for an extended period we are all screwed who own stocks and bonds whether the bonds are TLT, BND or SHY.. .
Not really, because after 6.2 years the increased interest will have compensated the BND holder, whereas TLT owners will have to wait 18 years. That's why it's important to match the duration to the time you have before you will need to start withdrawing. You probably want to be out of TLT by the time you are 70ish, and start drawing down when you are 50ish.
james7777 wrote:
Wed Nov 27, 2019 7:24 pm
I get the SAME amount of gains and losses from having $20,000 of TLT VS $60,000 BND OR $180,000 of SHY. this leaves me with more cash to trade with or save with while holding TLT vs BND or SHY. TLT is BND on steriods.
But you are also suggesting increasing your stock allocation. So, even though you maintain the level of drawdown on the bond side, your overall portfolio is riskier because of the extended time to recoup any bond NAV drop plus a higher allocation to stocks.

The correlation between VTI and TLT is -0.32, which gives you some zig versus zag, but it may not be enough to cover the extra risk.

invest4
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Re: TLT vs BND in portfolio.

Post by invest4 » Thu Nov 28, 2019 5:03 am

I had also strongly considered adding longer duration bonds (EDV) in my portfolio. Alas, I came to the same conclusion as the others in regard increased risk combined with current rates near zero...no thanks.

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LiveSimple
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Re: TLT vs BND in portfolio.

Post by LiveSimple » Thu Nov 28, 2019 12:32 pm

Explorer wrote:
Wed Nov 27, 2019 5:07 pm
Some food for thought:
- If and when interest rates rise, every 1% increase in rates would cause TLT to approximately lose 18% of its principal.
- if interest rates fall 1% from where they are now, TLT value will rise by approximately 18%

Can you afford that much of a swing in the bond values of your portfolio?
Is this real that TLT Will lose 18% ?
If it loses 18% will that happen on a short duration such as a year or over the period of the term of the bonds say 18 or 20 years.

if we follow a asset allocation and rebalance is this drop is compensated ?

I was 100% equities and planning to be 80% equities and 20% bonds, so want to understand better.

dbr
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Re: TLT vs BND in portfolio.

Post by dbr » Thu Nov 28, 2019 12:41 pm

LiveSimple wrote:
Thu Nov 28, 2019 12:32 pm
Explorer wrote:
Wed Nov 27, 2019 5:07 pm
Some food for thought:
- If and when interest rates rise, every 1% increase in rates would cause TLT to approximately lose 18% of its principal.
- if interest rates fall 1% from where they are now, TLT value will rise by approximately 18%

Can you afford that much of a swing in the bond values of your portfolio?
Is this real that TLT Will lose 18% ?
If it loses 18% will that happen on a short duration such as a year or over the period of the term of the bonds say 18 or 20 years.

if we follow a asset allocation and rebalance is this drop is compensated ?

I was 100% equities and planning to be 80% equities and 20% bonds, so want to understand better.
You can read the Wiki on duration: https://www.bogleheads.org/wiki/Bonds:_ ... s#Duration

Also the one year return of TLT is about +27%. An investment that can go up that much in a year can certainly go down that much in a year. In 2009 that fund lost 22% and in 2008 it gained almost 34%. This is called volatility.

But don't forget stocks are even more volatile than that. If you are 80% stocks you should certainly have no concern with the volatility of TLT. If you don't want that kind of volatility in your investments cut back to 50% stocks and use CDs or something for your fixed income. The expected return will be reduced accordingly.

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Re: TLT vs BND in portfolio.

Post by garlandwhizzer » Thu Nov 28, 2019 2:49 pm

james7777 wrote:

I just changed my portfolio after doing backtesting and observing daily movements of TLT ( 20 year government bond fund with a 18.2 year duration) and BND ( total bond fund with a 6.2 year duration).
This portfolio backtests very well because we have been in a declining inflation/declining interest rate scenario for more than 35 years. Interest rates on 10 Treasuries went from about 15% in 1982 to less than 2%. now. Declining rates consistently increases principal values of existing higher yielding long term bonds and declining inflation further juices those returns in real terms. So TLT looks fabulous on backtesting. Backtesting often is a flawed guide to the future however. If you expect with certainty that for the next 35 years this trend will continue TLT will once again shine brighter than BND. That would mean however that from current yields and inflation levels we would have to go deep into deflation and deep into negative yield territory to produce anything near these backtesting results going forward. If by some chance inflation takes off in the next 3 decades TLT will suffer relative to BND and even more so to shorter duration quality bonds. TLT magnifies on both upside and the downside and whether it will be upside or downside going forward is IMO unknown and unknowable for the next 3 decades. When it comes to future interest rates in the intermediate and long terms I believe there are two types of investors. Those who don't know where interest rates are going and those who don't know they don't know where interest rates are going. 100% TLT is a bet that entails increased potential risk as well as increased potential return. The bond market is now hovering around all time historical low yields, negative in some countries. This may not be an ideal time to lock up these ridiculously low yields on 20 year bonds. 1982 was the time to do it, not now IMO.

Garland Whizzer

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CULater
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Re: TLT vs BND in portfolio.

Post by CULater » Thu Nov 28, 2019 10:43 pm

From a risk parity perspective, you're better off using TLT with equities. That's because the volatility is more similar to stocks while returns have a low or negative correlation; so portfolio risk is weighted more equally between the risk of bonds and the risk of stocks, and these are different risks. There is a discussion about risk dilution vs. risk diversification.

viewtopic.php?t=285269

Shorter term bonds have the effect of dampening the ups and downs of equity returns, but portfolio risk is mostly concentrated in equities. Longer term bonds actually diversify the sources of portfolio risk, because long bond returns tend to zig when equity returns zag to a similar extent. Diversification represents the free lunch effect. Before foregoing the free lunch provided by diversification, one should ask whether their confidence in a single asset (stocks) is justified.
On the internet, nobody knows you're a dog.

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Re: TLT vs BND in portfolio.

Post by prioritarian » Sun Dec 01, 2019 2:53 pm

danielc wrote:
Wed Nov 27, 2019 5:25 pm
1) You have made your portfolio A LOT riskier. You dramatically increased your stock allocation, and you replaced less risky bonds with riskier bonds.
Their bond allocation has a higher beta but their portfolio beta could remain low due to the diversification provided by LT bonds (and especially so for portfolios with higher equity valuations).

"The purity of noncallable, long-term, default-free Treasury bonds provides the most powerful diversification to investor portfolios." -- David Swensen

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Re: TLT vs BND in portfolio.

Post by CULater » Mon Dec 02, 2019 10:38 am

prioritarian wrote:
Sun Dec 01, 2019 2:53 pm
danielc wrote:
Wed Nov 27, 2019 5:25 pm
1) You have made your portfolio A LOT riskier. You dramatically increased your stock allocation, and you replaced less risky bonds with riskier bonds.
Their bond allocation has a higher beta but their portfolio beta could remain low due to the diversification provided by LT bonds (and especially so for portfolios with higher equity valuations).

"The purity of noncallable, long-term, default-free Treasury bonds provides the most powerful diversification to investor portfolios." -- David Swensen
I believe Swensen is correct.
On the internet, nobody knows you're a dog.

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Re: TLT vs BND in portfolio.

Post by snailderby » Mon Dec 02, 2019 11:33 am

Check out this thread: viewtopic.php?t=287627. Some posters think long-term treasuries are a horrible idea. Other posters think long-term treasuries "offer superior diversification" for "investors with long-term investment horizons."

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Re: TLT vs BND in portfolio.

Post by garlandwhizzer » Mon Dec 02, 2019 1:06 pm

I think that if you have an equity dominated portfolio, by that I mean equity greater than 75%, it can be rational to hold only long term Treasury bonds which will dampen equity volatility better than shorter term instruments. Equity dominated portfolios are in serious need of stability in a bear market and nothing does that better dollar for dollar than LT Treasuries. If however you hold a 60/40 or 50/50 portfolio the question is different. The tradeoff between equity volatility dampening (LT better) and bond price stability/inflation risk (IT and ST better) shifts. Backtesting is inherently flawed to answer this question going forward because it involves a long period 35+ years of declining inflation/declining rates that have juiced LT bond returns for decades. In portfolios that are less equity dominated the risk/reward of LT over barbell (LT + ST) or TBM (LT +IT +ST) or IT alone shifts IMO. The great hidden risk in long term bonds is something that no has worried about for decades: substantial and ever increasing inflation. If you've tied up all your bond holdings in 20 -30 year Treasuries, yielding currently 2.03% - 2.21%, and inflation gets going say to 4+%, you've lost 40% - 60% of your principal value. No one thinks about that risk at present after almost 4 decades when the inflation trend was consistently going the other way. When you're tying up your money for 2 or 3 decades, however, it's a serious risk to consider IMO. No one can predict what cumulative compound inflation will be over the next 20 - 30 years, but there is a considerable risk that it will be in excess of the current LT Treasury yields 2% - 2.2%. This would result in negative real returns for these LT instruments, not a severe problem if that's only 10% - 20% of your portfolio. If you have such an equity dominated portfolio, hopefully equity gains will take up for that slack. If you're stuck with 50% LT bonds in such a scenario you suffer a lot more than ST, significantly more than IT, and massively more than TIPS options in real terms. LT TIPS avoids this inflation problem but since TIPS have underperformed Treasuries on backtesting, many of those who fall in love with backtesting ignore them.

Garland Whizzer

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Re: TLT vs BND in portfolio.

Post by rkhusky » Mon Dec 02, 2019 1:36 pm

CULater wrote:
Thu Nov 28, 2019 10:43 pm
From a risk parity perspective, you're better off using TLT with equities.
If you have a 30+ year investing horizon. And you've determined how to transition to shorter term bonds as your investing horizon becomes shorter.

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Re: TLT vs BND in portfolio.

Post by pdavi21 » Mon Dec 02, 2019 1:37 pm

Backtesting is more for meaningless arguments. It's not a tool for adjusting asset allocation.

Both of your portfolios are fine although they both seem to neglect INTL stocks and bonds.

You won't get many complaints about using long term treasuries instead of total bond market on this forum, so long as you recognize that the risks are higher or at least different.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

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Re: TLT vs BND in portfolio.

Post by CULater » Mon Dec 02, 2019 2:20 pm

rkhusky wrote:
Mon Dec 02, 2019 1:36 pm
CULater wrote:
Thu Nov 28, 2019 10:43 pm
From a risk parity perspective, you're better off using TLT with equities.
If you have a 30+ year investing horizon. And you've determined how to transition to shorter term bonds as your investing horizon becomes shorter.
No problem. I just reduced my equity allocation and long bond allocation keeping the ratio the same. I now hold 40% stock with 30% long treasuries. I think diversification is important with a short term horizon as well as a long term one, probably even more. Long treasuries are better diversifiers than short-intermediate treasuries.

One thing I fail to understand are the predictions that since interest rates have dropped so much over the years, and bond prices have risen so much as a consequence, this means that bonds have become overvalued and risky. Same people don't seem to worry as much about that with stocks, but they've both risen together. All forecasts are wrong. Bonds don't have any memory and neither do stocks. In the future though, the chances are that the negative correlation between long bonds and stocks will be the same when you need that the most. That's what diversification is about.
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Re: TLT vs BND in portfolio.

Post by rkhusky » Mon Dec 02, 2019 4:25 pm

CULater wrote:
Mon Dec 02, 2019 2:20 pm
rkhusky wrote:
Mon Dec 02, 2019 1:36 pm
CULater wrote:
Thu Nov 28, 2019 10:43 pm
From a risk parity perspective, you're better off using TLT with equities.
If you have a 30+ year investing horizon. And you've determined how to transition to shorter term bonds as your investing horizon becomes shorter.
No problem. I just reduced my equity allocation and long bond allocation keeping the ratio the same. I now hold 40% stock with 30% long treasuries.
And the other 30% is shorter term bonds and/or cash? If so, seems reasonable for someone who is 30 years from needing to withdraw the long bonds.

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