Round Table Bond Discussion Topic

[FiveDriver]

As a discussion among our more experienced Bond Holders --
What would be a viable ETF substitute for Individual Bonds ??

Would a long duration fund like TLT be a good vehicle to capture the current rates?

Would something like IEF at 7 - 10 years be a good choice ??

Something shorter like IEI at 3 to 7 years ??

Do these Bond Funds pay out monthly dividends ?? Reinvest ? Sweep into CMA ??

Any other topics that may arise.....

 

[Montecfo]

It depends on your objectives.

Rates peaked in October/Nov so now I am extending durations personally. You might want to split money among those funds for diversity so you do not have all eggs in one basket, and not speculating on rate direction.

Edit to add: those are well rated funds.

 

[pb4uski]

I think the best alternative to individual bonds are target maturity bond ETFs, a fairly narrow niche of the bond ETF universe.

These ETF's raise money and invest in certain specified bonds that mature in a specified year. Then when the specified year comes, they collect maturity money and reinvest it short term and then in December make a terminal distribution and the ETF dies. They typically have a common theme (Corporates, Munis, Treasuries, High Yield, Emerging Market) and low ERs.

They sort of straddle owning individual bonds vs perpetual bond funds or ETFs. You can also ladder them. A 5-year corporate (mostly BBB/A rated) bond ladder (2023-2027) would have a 4.82% YTM and a 5-year Treasury ladder would have a 4.24% YTM.

YMMV.

https://www.ishares.com/us/strategies/bond-etfs/build-better-bond-ladders

https://www.invesco.com/us/en/solutions/invesco-etfs/bulletshares-corporate-bond-portfolios.html

https://www.ishares.com/us/products...s&sortDirection=desc&dataView=fixedIncomeView

 

[FiveDriver]

Thanks guys. I've been tracking TLT and the iShares shorter ones. I own TLT and buy a little more each time the share price dips into the mid-90's every so often.

I don't think I want to own Bonds outright. I have CD's and Fido MM is paying over 4% these days. IMO, I think there may be one more peak for Bonds as the FED makes it's last moves.