Friday, September 25, 2009

Bond ETFs: Links in One Post

Added 6/22/09: In the original post, I mentioned that I have no interest in buying individual treasury inflation protected securities. I have since changed my mind, and will start buying those securities in a retirement account directly from the Treasury:

Many of the linked posts below contain discussions on the advantages and disadvantages of bond ETFs. The one that generates the most interest is : Advantages and Disadvantages of Treasury Inflation Protected Securities:

**************original post:

This is a Gateway Post for Bond ETFs, intended merely to collect links where these ETFs were discussed in this blog and to add some introductory comments.

I currently own TIP, BWX and WIP. (all sold since this post was written, with the reasons discussed in the relevant links provided below)

Vanguard has several low cost bond ETFs that I owned until early last year. Those included BND, an index ETF for the total bond market, and BSV, an index for short term bonds. I had a good profit in my positions in BND and BSV. I decided to harvest the gains in 2008, primarily due to the low yield of those ETFs at the time. Instead, since I am comfortable buying individual bonds, I went searching for better yields with individual securities. This may not be the best alternative for most individuals who lack the time to delve into individual security selection or the funds to achieve a diversity of positions.

Links to the Vanguard web pages for its Bond ETF offerings is one that frequently does not work properly (here it is in case it does work: Vanguard - Exchange-traded funds by asset class - Prices and performance ).

Ishares also has several bond ETF offerings. iShares ETFs - Exchange Traded FundsOf those listed, I currently own only TIP, the U.S. Treasury Inflation Protected securities ETF. iShares Barclays TIPS Bond Fund (TIP): OverviewJust navigate to Fixed Income in the column to the left on the main page. I have traded LQD twice this year for good gains, and have owned in the past GVI. I have also owned the 1 to 3 year treasury ETF- SHY- but the yield on that one has fallen with the decline in short rates. iShares Barclays 1-3 Year Treasury Bond Fund (SHY): Overview I have sold that one too.

I also currently own two international bond ETFs offerings from State Street Global Advisors: BWX and WIP (this site is not friendly to Safari users)
I have owned, and recently sold, TFI, an ETF for municipal bonds. SPDR Barclays Capital Municipal Bond ETF

This page contains a link to all of the offerings from State Street. SPDRs - View All

I will generally buy a bond ETF as a substitute for buying individual securities in a particular sector. I have no interest for example in trying to buy individual international government bonds, or U.S. Treasury Inflation Protected bonds. I have bought individual U.S. corporate bonds, and I will participate in Treasury auctions again once the U.S. decides to start paying a meaningful amount of interest on its debt obligations. Those purchases are made through the Treasury Direct program. TreasuryDirect I am now in a run off mode for Treasury securities, allowing any maturing ones to be redeemed for cash.

I have discussed a few bond ETFs a great deal in this blog, primarily BWX, TIP AND LQD. One point to always keep in the forefront of your mind about International Bonds is that there are several ways to both win and lose. The two main ways involve currency risk and the risks associated with any bond, a rise or fall based on inflation and credit risks. The NYT reported that David Swenson has argued against using foreign bonds in an asset allocation in this article:

As usual with these Gateway Posts, I will add new entries in the appropriate category, and will simply change the color of the posts added after this one was originally published:


ITEM # Bought 50 EUO at $17.17 as a Hedge (Sold remaining shares of BWX based on evaluation of risk/reward at the price sold, which was $59.38)


Vanguard Bond ETFs

LQD: Investment Grade Corporate Bonds:



Treasury ETFs in General:

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