[Europe] Help on bonds

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boffum
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[Europe] Help on bonds

Post by boffum »

I've read several bond-related topics here but I believe my question is unanswered. Apologies if I'm wrong.

I'm 80% stocks, 20% bonds, late 30s, live in EU. For the bond part, I have a mix of AGGH and CD, as a nice little boglehead who has read the wiki. Now the thing is, I don't see how my AGGH could ever have positive returns over a significant portion of my investing life. So the natural choice, as often suggested, may be to move 100% to CDs. However, I see two issues with that:

1) CDs now have a very low yield anyway in my country (<1%)

2) CDs don't compound! I don't like to pay capital gain taxes every 1-2-3 years, decreasing my principal.

So I'm thinking to increase a bit the risk and variance on my bond part, in order to get positive returns. I wouldn't drop the CDs completely, but I'm considering replacing AGGH and some of the CDs with something else. I'd be satisfied with an expected return of around 1-2% or so.

Does it make sense?

If yes, under this assumption, which (mixture of) bond(s) would you recommend? These are the minimum requirements I'm considering:
  • Accumulating
  • EUR hedged
  • At least Investment grade
  • Govt and/or corporate
  • No inflation-linked, as I'm already heavy in stocks, that should be enough hedge
I've listed a few (very different) candidates that satisfy these requirements:

[BANKS] LU1852211991 UBS ETF (LU) Sustainable Development Bank Bonds UCITS ETF (hedged to EUR) A-acc
[EMERGING] LU1974696418 UBS ETF (LU) J.P. Morgan USD EM IG ESG Diversified Bond UCITS ETF (hedged to EUR) A-acc
[EMERGING] IE00BK8JH525 SPDR Bloomberg Barclays Emerging Markets Local Bond UCITS ETF EUR Hedged Acc
[TIPS] IE00BDZVH966 iShares USD TIPS UCITS ETF EUR Hedged (Acc)
[US CORP] LU1048315243 UBS ETF (LU) Bloomberg Barclays US Liquid Corporates 1-5 UCITS ETF (hedged to EUR) A-acc

Do you see any merit in the mix and matching of some of these to replace my current allocation? Or any other suggestion? Thank you!!
sean.mcgrath
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Re: [Europe] Help on bonds

Post by sean.mcgrath »

Welcome to the forum!

I am definitely not an expert, but fwiw I went with IEAG. It is an iShares Euro bond fund that meets your criteria. It is a mix of Corporate and Government.

Since I plan to retire in the EU, I like that it does not add currency exposure. Mine is distributing, but any that follows the Bloomberg Barclays Euro Aggregate Bond Index should be similar. For example, LU0836513423 is accumulating I believe.

Honestly, though, I think anything that follows your criteria with a decent expense ratio is fine.
DJN
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Re: [Europe] Help on bonds

Post by DJN »

Hi,
it looks like you are trying to build an AGGH yourself.
I would check the TERs as some of your suggested funds have higher TERs than AGGH.
Often your choices are heavily dependent upon your tax residence, fortunately the EU is not a country and bureaucrats sitting in Brussels don't set your jurisdiction's tax. It would be useful to know what country you pay taxes in.
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
Topic Author
boffum
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Re: [Europe] Help on bonds

Post by boffum »

Thanks for your input, Sean. My objection is that I think IEAG would perform similar to AGGH, or worse. Not sure if it makes sense to you, but my feeling is that a pure Euro bond has no chance of providing positive returns in any foreseeable future.
Topic Author
boffum
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Re: [Europe] Help on bonds

Post by boffum »

DJN wrote: Wed Jun 16, 2021 9:33 am Hi,
it looks like you are trying to build an AGGH yourself.
I would check the TERs as some of your suggested funds have higher TERs than AGGH.
Often your choices are heavily dependent upon your tax residence, fortunately the EU is not a country and bureaucrats sitting in Brussels don't set your jurisdiction's tax. It would be useful to know what country you pay taxes in.
DJN
You are not wrong... basically I'd like to exclude from AGGH everything that has 0 chance to give positive returns :) But I would be fine with a very rough approximation.

I pay taxes in Italy, if that can help.

I screened justetf to find something interesting, and at the moment I can only propose a mix of TIPS plus emerging in local currency, EUR hedged. But I'm far from an expert... that's just my naive idea. Feedback is warmly welcomed.
DJN
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Re: [Europe] Help on bonds

Post by DJN »

Hi,
I think that you are already probably doing the best thing with AGGH, I have had it for years and my returns remain positive. I wouldn't complicate things, in fact if you can get your hands on VNGA60 or VNGA80 and that suits your tax regime (accumulating) then I would just buy that one fund from now on.
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
sean.mcgrath
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Re: [Europe] Help on bonds

Post by sean.mcgrath »

boffum wrote: Wed Jun 16, 2021 9:35 am Thanks for your input, Sean. My objection is that I think IEAG would perform similar to AGGH, or worse. Not sure if it makes sense to you, but my feeling is that a pure Euro bond has no chance of providing positive returns in any foreseeable future.
Well, they do have a fair amount of higher yielding Government and Corporate bonds. Even in the ultra low interest years, the results are not bad:

Code: Select all

 	 	 	2016 	2017 	2018 	2019 	2020
Total Return (%) 	3.17 	0.48 	0.21 	5.83 	3.81 
https://www.ishares.com/ch/individual/e ... -ucits-etf

No guarantees for the future, of course. 8-)
jg12345
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Re: [Europe] Help on bonds

Post by jg12345 »

Hi there

great question, already discussed plenty of times in this forum.

Few points:
1 EM Bonds are correlated with stocks and close to HY bonds - definitely higher returns, but they will go down when stocks go down. This defeats the purpose of the bond part of your portfolio. I'd rather add stocks.

2 Development bank bonds. Just making sure you understand them... I did not know this ETF existed, and I work for one of those IFI :) You'd be buying bonds from basically 6 issuers (World Bank - IBRD and IDA, EBRD, African DB, Asian DB, Interamerican DB). They then lend money to low and middle income countries, and their funds are replenished by high income countries because borrowers often don't pay. I think they're all investment grade, but if participation into one of those becomes a political issue and a big country (say JPN or US or Germ) decides to pull out for any reason you'd be in for a ride.

3 TIPS and the short term corporate have higher returns (I suppose?) but higher correlation to stock market/volatility too. ILB ETF (US seems ok and there's a global EUR hedged one, XGIN) may be a choice if you think there will be unexpected inflation. but really you're still looking at negative rates.

Bottom line to me is that bond markets are rather efficient, if you do want more income, then you get more volatility/correlation to stocks. Hence, either buy more stocks and stomach the volatility, or have to live with AGGH, CDs. Cash also a choice, although it's quite a wild guess that cash will do better than AGGH or CDs long term.

To conclude, I'd stick to AGGH or CDs, which FWIW in Italy they have the best rates in EU (more risk too, but I pray for everyone's health that the guarantee would work)

Note 1: not true CDs do not compound, you can just reinvest the returns. it is though true and painful that you leave 20% in CGT down.
Note 2: just to clarify - TIPS are inflation linked so I'm not sure I get "no inflation linked" as a requirement and then put TIPS in the list.
best
glorat
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Re: [Europe] Help on bonds

Post by glorat »

boffum wrote: Wed Jun 16, 2021 9:38 am You are not wrong... basically I'd like to exclude from AGGH everything that has 0 chance to give positive returns :) But I would be fine with a very rough approximation.
In times of market stress, you'll find the opposite happen - all the low yield things from AGGH will increase in value whilst all the higher yield items that "give positive returns" will lower in value. The reason why people like bonds to balance equities is to keep you in good shape during market stress. If you wanted more positive returns, you can always just get more equities

TL;DR, keeping it simple and sticking with AGGH and finding a good AA seems to be the way to go
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boffum
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Re: [Europe] Help on bonds

Post by boffum »

jg12345 wrote: Wed Jun 16, 2021 12:32 pm [...]
Thank you, really informative comment! I'm paying 26% of TCG on CDs, which makes me a sad panda. But I see your points.
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boffum
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Re: [Europe] Help on bonds

Post by boffum »

glorat wrote: Wed Jun 16, 2021 11:48 pm In times of market stress, you'll find the opposite happen - all the low yield things from AGGH will increase in value whilst all the higher yield items that "give positive returns" will lower in value. The reason why people like bonds to balance equities is to keep you in good shape during market stress. If you wanted more positive returns, you can always just get more equities

TL;DR, keeping it simple and sticking with AGGH and finding a good AA seems to be the way to go
Help me to understand: how will AGGH return a positive yield in a market downturn, if interest rates can't go any lower? I'm not sure how we can claim that bonds like AGGH will have negative correlations with stock. This was true in the past but I can't see how it will be true in the next decade or so.
jg12345
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Re: [Europe] Help on bonds

Post by jg12345 »

boffum wrote: Thu Jun 17, 2021 3:07 am
jg12345 wrote: Wed Jun 16, 2021 12:32 pm [...]
Thank you, really informative comment! I'm paying 26% of TCG on CDs, which makes me a sad panda. But I see your points.
Ah thanks for the clarification on Italy CGT. I'd still go for AGGH and CDs :) and if you really want to increase returns, increase stocks.

Side note: interest rate could possibly go lower. https://www.cnbc.com/2021/02/04/bank-of ... nged-.html

I get that AGGH may go down in downturn, but it's still the most uncorrelated public asset available, so if it does go down in market downturn it will do so very little compared to stocks.
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boffum
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Re: [Europe] Help on bonds

Post by boffum »

... but cash would go down even less, then :)

For a Euro person, the only appeal of AGGH would come from rates going further down (in average, worldwide).

Based on the probability and magnitude of this happening, one should decide whether to have some AGGH or just keep CDs. Would you agree with this statement?
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tre3sori
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Re: [Europe] Help on bonds

Post by tre3sori »

Read this informative Vanguard paper on emerging market bonds if you like:
https://www.vanguard.com.hk/documents/e ... -bonds.pdf

If you start with 80% global stocks/20% global bonds and then switch to EM bonds,
you could up-risk your stocks/AGGH allocation to 85%/15% to have about the same result.

I have used US funds in the following Portfolio Visualizer Analysis, but the result should be portable:
https://www.portfoliovisualizer.com/bac ... tion5_2=20

The 85%/15% stocks/AGGH allocation has the better risk adjusted return.
Let every man divide his money into three parts, and invest a third in land, a third in business, a third let him keep by him in reserve. Talmud | 35% Real Estate, 45% Stocks, 15% Bonds, 4% Gold, 1% Cash
DJN
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Re: [Europe] Help on bonds

Post by DJN »

boffum wrote: Thu Jun 17, 2021 5:08 am ... but cash would go down even less, then :)
For a Euro person, the only appeal of AGGH would come from rates going further down (in average, worldwide).
Based on the probability and magnitude of this happening, one should decide whether to have some AGGH or just keep CDs. Would you agree with this statement?
Hi,
I agree that cash is important but you have to take care with bank guarantees, they are very meagre in europe and you could lose some of your money if some bank or central bank decides to screw the depositors. Remember Cyprus, that case demonstrates that this is a real issue. French and German banks' lending issues along with geopolitical trends may force the issue on the periphery again. When you achieve a certain level of assets you have to look at bonds in my view.
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
jg12345
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Re: [Europe] Help on bonds

Post by jg12345 »

boffum wrote: Thu Jun 17, 2021 5:08 am ... but cash would go down even less, then :)

For a Euro person, the only appeal of AGGH would come from rates going further down (in average, worldwide).

Based on the probability and magnitude of this happening, one should decide whether to have some AGGH or just keep CDs. Would you agree with this statement?
Cash or CDs would go down even less, yes. But cash would offer lower returns than AGGH. The max drawdown is important if you fear selling in a downturn, but it can't be the sole decision point. The second question is: what is long term return of cash vs. AGGH? And AGGH would then be preferable to cash because also cash will face negative real returns due to inflation. AGGH with very low returns and volatility vs CDs at 0.5% net per year and little/no volatility... difference gets smaller and then getting the CDs sounds good.

Btw, I suggest reading this regarding growing interest rates, excellent post by Nisiprius viewtopic.php?p=6069268

Based on probability and magnitude... I think holding only CDs in your bond allocation is a highly acceptable solution (note: because CDs have no volatility but only default risk, you may even up the stock portion), especially when you can get 0.5% net. If you're undecided, then maybe mix AGGH and CDs? One thing I am sure is I would suggest against chasing returns with bond allocation (tre3sori has perfectly explained how increasing stock allocation is preferable!).
Topic Author
boffum
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Re: [Europe] Help on bonds

Post by boffum »

You guys are awesome! I am serious. I learned so much in just a day here...

So, okay, I understand that you are right. I upped my stock allocation and - for now - entirely replaced AGGH with CDs. But I understand that, as the amount of money stashed in CDs will grow over time and/or CD rates will go to zero, I will have to put some of that money back into AGGH to hedge against bank default, even if that may cost me a few points in returns.

Now you made me question my small cap allocation but I'm not sure if I should take further advantage of you haha
jg12345
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Re: [Europe] Help on bonds

Post by jg12345 »

haha sono contento che siamo stati di aiuto ... I posed the same question before too :)

Similarly, I posed myself the SC question too, so for small caps there are other threads that may answer your questions

My points:
1) benefit of SC at market weight are only the better feeling of diversification, but you pay with one more ETF, higher TER and not much better returns (highly correlated to ACWI or FTSE all-world)
2) I can see some benefit in overweighting SC in a "factor" allocation strategy. In that case you need to use SC value. However: risk that you need to stick to strategy for very long time, limited access, increased TER, and increased complexity... made me stay with only 1-2 ETF for stocks.

Bottom line: no, I did not add them, but I can see someone may see reasons for SC.

If you open a new thread you may get (better) answers from others.

Threads here:
viewtopic.php?f=22&t=344614&p=5918580&h ... s#p5918580
SC or not?
1) on small caps... You'd be more diversified in terms of cap size but ... is that good diversification? not so much, because small caps are highly correlated to large and mid caps. So you'll get little to no additional return, for a significantly higher fee -> not really great. at least this is my understanding. if there was an ETF in EUR that would have all world all caps at 0.2% ter, I'd take it, but I don't think there is one. there are 2 or more discussion in the forum, do look them up. note that small caps are ~10% of total market cap.

here a comparison of MSCI ACWI (large and mid) and MSCI ACWI IMI (large mid and small). over 10 years, the difference in returns is 0.02 (9.45 ACWI, 9.43 ACWI IMI) => past is not indicative of the future, but it seems to me is not worth the admin, psychological, and TER costs
https://www.msci.com/documents/10199/42 ... d36472a703
https://www.msci.com/documents/10199/8d ... 2942e3adeb

Factor investing
viewtopic.php?f=22&t=348086&p=5989197&h ... s#p5989197
glorat
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Re: [Europe] Help on bonds

Post by glorat »

boffum wrote: Thu Jun 17, 2021 3:09 am
glorat wrote: Wed Jun 16, 2021 11:48 pm In times of market stress, you'll find the opposite happen - all the low yield things from AGGH will increase in value whilst all the higher yield items that "give positive returns" will lower in value. The reason why people like bonds to balance equities is to keep you in good shape during market stress. If you wanted more positive returns, you can always just get more equities

TL;DR, keeping it simple and sticking with AGGH and finding a good AA seems to be the way to go
Help me to understand: how will AGGH return a positive yield in a market downturn, if interest rates can't go any lower? I'm not sure how we can claim that bonds like AGGH will have negative correlations with stock. This was true in the past but I can't see how it will be true in the next decade or so.
Great questions! First let's try to correct any misunderstandings in what I am saying
  • I didn't say AGGH will return a positive yield in a market downturn. I said they would increase in value
  • Interest rates can definitely go down - they are still positive outside of Europe/Japan. But if "everyone" believes they can only go up, this is already priced in to valuations
  • I do not claim AGGH will have negative correlations with stock. I do claim *your* proposed bond portfolio has positive correlations with stocks and that the positive correlation is higher than AGGH. I do claim that the bonds your portfolio has *excluded* from AGGH are zero or even negatively correlated with stocks in short term market swings
In terms of what I understood you to say is that you wanted to exclude bonds that do not "give positive returns", which I think you mean do not have a positive yield or coupon on the bond. But coupon is only one small part of a bond, there is also the price. I won't explain it all here - have a look at the wikis. The thing to know is that in times of market stress, high yield bonds, like equities become, volatile and may lose a lot of value because of the risk of default. High quality bonds, particularly those with 0% yield, suddenly become attractive because they are less likely to default.

So basically, in times of market downturn or stress, you'll see prices of US treasuries or negative yielding German Bunds suddenly go up in value.

High quality, low yielding bonds have the lowest correlation to equities (compared to any other bond). If you are looking for diversification, they are worth having - especially in this new next decade where people are seeing bonds to be an unattractive investment due to low yields. Does anyone here see the flight to safety effect to be any different in this coming decade?
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boffum
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Re: [Europe] Help on bonds

Post by boffum »

@jg12345: grazie :) I'll allocate 5% of my stock portion to small cap (IE00BF4RFH31) for now, we'll see. It may be a waste of time, but I like the diversification. Emerging market (EMIM) already has small cap, so not having small cap at all for developed didn't feel right.

@glorat: Yeah, I think now I get it and I'm pretty much convinced. This is my plan for now: I'll keep just CDs until the amount of money invested in the bond portion is low enough (maybe 100k, until I don't need to open another one to stay within the EU-backed limit), and then start buying AGGH. I'll keep contributing over the years so maybe I'll buy back into AGGH in a year or two. It makes sense to me.
DJN
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Re: [Europe] Help on bonds

Post by DJN »

boffum wrote: Fri Jun 18, 2021 3:35 pm This is my plan for now: I'll keep just CDs until the amount of money invested in the bond portion is low enough (maybe 100k, until I don't need to open another one to stay within the EU-backed limit), and then start buying AGGH. I'll keep contributing over the years so maybe I'll buy back into AGGH in a year or two. It makes sense to me.
Hi, if your original allocation of 20% to fixed income still holds then you are proposing to hold 20% in cash. If that is correct then you are allowing 20% of your portfolio lose money to inflation over a period of years when at 30ish you don't have the risk of drawdown just before retirement. You might consider starting with the "emergency" funds you think you might need as a priority, then I would have thought that putting some or all of your money into a slightly riskier asset like bond funds would be sensible. Why not allocate appropriately to your emergency fund, and then load up on AGGH until you get to 20% total on the fixed income / cash side. After that you should re-balance into equities any surplus over 20% at your annual re-balance exercise. Now sounds like a good time to write your investment plan so that you can stick to it if you haven't done so already:
https://www.bogleheads.org/wiki/Investm ... _statement
DJN
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boffum
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Re: [Europe] Help on bonds

Post by boffum »

I think my underlying assumption is that today and in the short term, CDs provide a better return with a lower risk than AGGH, so I'm not convinced I should hold any AGGH for now.

In my country, I could get a CD with ~1% return (before taxes) for the next 2 years, and re-evaluate buying AGGH in 2 years from now. Isn't it the best solution?
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Re: [Europe] Help on bonds

Post by glorat »

boffum wrote: Sun Jun 20, 2021 5:40 am I think my underlying assumption is that today and in the short term, CDs provide a better return with a lower risk than AGGH, so I'm not convinced I should hold any AGGH for now.

In my country, I could get a CD with ~1% return (before taxes) for the next 2 years, and re-evaluate buying AGGH in 2 years from now. Isn't it the best solution?
In theory, that's not supposed to happen but in practice, retail customers in Europe do indeed get 1% returns, which is higher than the risk free rate of interest in EUR (of less than 0%). I'm not sure how European banks are offering it to customers (is it a loss leader?) but it is certainly a very strong argument of just happily taking those CD rates for the short term.
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tre3sori
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Re: [Europe] Help on bonds

Post by tre3sori »

boffum wrote: Sun Jun 20, 2021 5:40 am Isn't it the best solution?
Glorat was faster than me, i still post.

Image

Morningstar always gets the colors wrong:
Blue - Vanguard FTSE All-World UCITS ETF
Green - Vanguard Global Aggregate Bond UCITS ETF EUR Hedged
Black - Invesco EuroMTS Cash 3 Months UCITS ETF

What this shows: Cash has negative nominal return. Banks, at least in Central Europe, start to levy fees on cash deposits. In peripheral European countries you may get 1% for CDs by some banks, but you pay with the risk, that the government is not able to bail you out via deposit insurance, in case your bank goes bancrupt, however unlikely that is. The EU has no EU-wide deposit insurance and countries are not masters of their currency. They cannot print the money to bail out every bank they want.
So my take is that a global government or diversified bond ETF is more secure from a credit point of view. I am willing to get less return in exchange for that security.

It also shows that in times of crisis (Corona shock) high quality bond funds tend to counter the drop in stocks somewhat (negative correlation or at least no correlation after a short period of positive correlation of all assets in an economic shock). You don't get that with cash.

Of course, a bond fund with a duration of about 7 years like AGGH or Vanguard Global Aggregate Bond UCTS ETF EUR Hedged has interest rate risk. If you believe in rising rates and you want to avoid interest rate risk, go with CDs but take care of the maximum deposit protection limit.
Let every man divide his money into three parts, and invest a third in land, a third in business, a third let him keep by him in reserve. Talmud | 35% Real Estate, 45% Stocks, 15% Bonds, 4% Gold, 1% Cash
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alpine_boglehead
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Re: [Europe] Help on bonds

Post by alpine_boglehead »

boffum wrote: Sun Jun 20, 2021 5:40 am I think my underlying assumption is that today and in the short term, CDs provide a better return with a lower risk than AGGH, so I'm not convinced I should hold any AGGH for now.

In my country, I could get a CD with ~1% return (before taxes) for the next 2 years, and re-evaluate buying AGGH in 2 years from now. Isn't it the best solution?
I've come to pretty much the same solution - with CDs I get a return quite a bit above the risk free rate. Even here in Austria (which I would consider on par with Germany regarding fiscal stability), for a 3 year CD you can get 0.6% p.a., which is 1.2% above the risk free rate of -0.6% for 5 year German bonds.

However, it isn't all or nothing. You can put e.g. 20% in AGGH and 80% in CDs.

The CDs can't be prematurely cashed out before expiration (at least I'm not sure under which circumstances I could break them, might be the same for you), so they are illiquid. You can do two things to compensate. First, the above, i.e. not have everything in CDs but some part in bond funds which can be sold on any trading day. Second, rolling the CDs, i.e. have a ladder of e.g. 3 year CDs, thus always having one mature within a year or less.

Also, you can hold these at different banks well below the €100k deposit insurance limit (in case of a Cyprus-like scenario where deposits take a haircut, IMO there's a good likelihood that there would be some limit, maybe lower than €100k below which there wouldn't be any haircut, in order to keep the number annoyed citizens low.
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Re: [Europe] Help on bonds

Post by Valuethinker »

glorat wrote: Sun Jun 20, 2021 9:43 am
boffum wrote: Sun Jun 20, 2021 5:40 am I think my underlying assumption is that today and in the short term, CDs provide a better return with a lower risk than AGGH, so I'm not convinced I should hold any AGGH for now.

In my country, I could get a CD with ~1% return (before taxes) for the next 2 years, and re-evaluate buying AGGH in 2 years from now. Isn't it the best solution?
In theory, that's not supposed to happen but in practice, retail customers in Europe do indeed get 1% returns, which is higher than the risk free rate of interest in EUR (of less than 0%). I'm not sure how European banks are offering it to customers (is it a loss leader?) but it is certainly a very strong argument of just happily taking those CD rates for the short term.
This is key. It is an anomaly arising out of banks' need to have retail deposits.

One *must* stay within the EUR 100k deposit insurance limit AND be sure that the requisite government can guarantee the depositors in a crisis. European regulators have made it abundantly clear that in future bailouts, large depositors will be "bailed in" ie some of their savings converted into equity. To be fair they may not have said so explicitly, but that is what happened in the case of Bank of Cyprus.

When the small bondholders of Paschi de Sienna, the world's oldest bank, were bailed out, the Germans kicked up a real ruckus on the basis that bonds are risky and investors in bonds should know that (something similar in Spain led to a very public suicide by a bondholder who had lost out). In reality Italian banks had been selling their bonds to small investors as alternative to low deposit rates.

Some of the "challenger" banks in the UK have I think an ?Estonian? banking license. There's no way govt of Estonia (popn c 1.5m?) can bail out a major UK depositor. Something similar happened during the Iceland crash and it took a while before the UK and Icelandic govts agreed on a bailout of depositors.

So this is something you have to keep a watchful eye on.

But bank deposits pay better than high quality Eurozone bonds right now, and with a government guarantee.
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Re: [Europe] Help on bonds

Post by jg12345 »

Valuethinker wrote: Tue Jun 22, 2021 3:12 am
Some of the "challenger" banks in the UK have I think an ?Estonian? banking license. There's no way govt of Estonia (popn c 1.5m?) can bail out a major UK depositor. Something similar happened during the Iceland crash and it took a while before the UK and Icelandic govts agreed on a bailout of depositors.
Revolut for example has a Lithuanian banking licence. However, Revolut deposits are larger than Lithuania GDP, so you get the idea: hard that Revolut deposits will be actually guaranteed. OP is in Italy, which I'd deem a better place (than Lithuania) to deal with a single bank crash, but obviously more at risk of a system crash than Germany/France/Spain/UK government. You know the 100k limit already
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