Monday, December 15, 2008

BWX: International Treasury Bonds

Before leaving my headquarters for the day, to attend to family matters, I wanted to add another point.  I have discussed my purchases of the SPDR International Treasury Bond ETF (BWX) in prior posts.  Besides achieving bond diversification in a sector where I would probably not buy an individual security, I noted the heavy concentration of Japanese government bonds in this ETF.  BOND ETFS BWX AND TFI  I tend to agree with the author of a WSJ article today that the fall in U.S. government interest rates will pressure the value of the dollar versus the Japanese   There simply will be less interest among Japanese investors,  who are use to their own government paying almost nothing in interest, in buying U.S. Treasuries which now yield almost nothing.  Why take the currency risk or pay to hedge it? While I have previously noted the bull market in the Japanese Yen, and the ETF FXY as one way to play it, I have elected for now to limit my exposure to Yen to owning a good sized position in BWX which has a large position in Japanese government bonds. SPDR Lehman International Treasury Bond ETF (BWX) - State Street Global Advisors - Fund Detail Until recently, the Aussie dollar had been a victim of the YEN carry trade, where investors borrowed money in Yen, converted the Yen into Aussie dollars, and earned the difference in interest rate spreads.  This was fine as long as the Yen was not appreciating.  I suspect that those engaged in this trade have probably liquidated it, contributing to the rise in the Yen and the fall of the Aussie dollar as the Yen carry trade was unwound.   I still have a small position in Aussie dollars, playing almost with the house's money.   I have a smaller position in WIP. SPDR DB International Government Inflation-Protected Bond ETF - Fund Detail
(without checking, I think that I am barely under water with WIP and profitable in BWX without taking into account the monthly dividend payments)

 I am not a financial advisor but an individual investor trying to navigate my way through a difficult market. In these posts, I am acting as an unpaid financial journalist and an occasional political commentator.   I am also aggregating financial news stories that I view as important and providing any reader of these posts, assuming there are more than a couple, with links to those articles, sort of a filtered, somewhat intelligent, free search engine.  Any discussion made by me of particular securities  is not a recommendation to buy or to sell.  Trade at your own risk.  Consult with your financial advisor prior to making any purchase or sale. I will try to identify my sales too but it may take a few minutes after I implement them to create a post explaining my reasons.  The sale may before or after the post.  Before buying or selling any stock, even one recommended by a trusted financial advisor,  please research it and make up your own mind which is what I always try to do.  Research would include reading reports, reviewing financial records, earnings estimates, sec filings and prior earnings releases and news.  In this post, and all others by me, I am merely describing my reasons for purchasing  or selling securities, and the potential pitfalls that I identified prior to purchase or the reasons for a sale.  The securities mentioned in this and all posts written by me may not be suitable for others based on their unique financial position and risk profile.  Always read the prospectus before buying a Trust Certificate, bond, preferred stock or other bond or bond like investments.  Information contained in my posts has been obtained from sources believed to be reliable but cannot be guaranteed.  These posts by me do not constitute investment advice, nor shall they be construed as a guarantee of future results, or as an offer of any transaction in securities.   

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