7 Years' Living Expenses Largely in Short-Term Bond ETF: Thoughts?

[audreyh1]

Quote:

Originally Posted by Sunset These two vanguard intermediate bond investments look pretty close, VBILX (which is also available as etf BIV) BND (an etf) I can't really see to prefer one over the other, but maybe someone else has a reason I should pick one vs the other ? https://personal.vanguard.com/us/fun...FundIntExt=INT vs https://personal.vanguard.com/us/fun...FundIntExt=INT I think there are two questions here etf comparison BIV vs BND and Why pick a fund over etf for bonds when supposedly the same content ?

It's probably worth spending some time reviewing the options. Here is just one article among many you can find with a search on good core bond ETFs or funds : Best ETFs: Medium-Term Bond Funds - Forbes

ETFs tend to be lower in expense. Depending on where you own them, trading may be commision free as well. AGG is a bond index that's often used as the benchmark for diversified intermediate bond funds. It's also low-cost.

The core intermediate bond funds I own are in the 4 or 5 year duration rather than the 6 years of the Vanguard ETFs, but that probably doesn't matter that much for the long run - i.e. for a long term holding period. If you care about having some money available in 1, 2, 3, 4, 5 years, etc. you can accommodate this with a mix of cash, short-term and then intermediate term bonds.

I have a large position in DODIX - that's an example of a core intermediate fund. It's not an index, and it's not as inexpensive as the Vanguard offerings or ETFs. MWTRX is another core bond fund that generally gets good marks. These are just examples.

[mathjak107]

etf bond funds may be not a great choice . etf's can trade at a premuim or discount to assets. on equity funds that difference is so small it is not even worth thinking about. but bond funds are another story. the premiums and discounts can range quite a bit ,especially where high yield is involved.

if you buy at a premium and sell at a discount you can see poorer results than a conventional open ended fund.

in a down market etf bond funds tend to get hit harder than the assets it holds and are more volatile since you can short sell them.

http://www.forbes.com/sites/investor...ter-than-etfs/