10-20% Bonds? What’s the point?

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imak
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Re: 10-20% Bonds? What’s the point?

Post by imak »

If the goal is to maximize diversification with a small 10%-20% allocation to bonds, TMF as a leveraged long term treasury ETF is highly capital efficient.

For example, 70% VTI, 30% TLT portfolio is replicated quite well by 70% VTI, 10% TMF and 20% Cash.

https://www.portfoliovisualizer.com/bac ... tion4_2=20

This strategy allows the cash portion to be invested in other diversifiers (SCV, Emerging mkts, etc), while getting benefits of 30% TLT for the overall portfolio. However this comes at a cost of higher expense ratio, volatility decay, etc associated with Leveraged ETFs.
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willthrill81
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Re: 10-20% Bonds? What’s the point?

Post by willthrill81 »

stimulacra wrote: Wed May 12, 2021 8:45 pm
willthrill81 wrote: Wed May 12, 2021 4:14 pm
stimulacra wrote: Sun May 09, 2021 10:27 pm I think the hope for me is to use bonds to weather a recession and not panic sell.
Honestly, a 10-20% allocation to VIX, if possible, would do far more than a 10-20% allocation to something like TBM to help stabilize a stock heavy portfolio. It's too bad that you cannot inexpensively get direct exposure to VIX.
I don't trust derivatives to function as ballast when I need it most. I do use 3X leveraged ETFs in my fun account.
As I said, you cannot directly buy VIX exposure at a low cost anyway.
The Sensible Steward
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