What are you earning on your fixed income?

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alwaysonit
Posts: 81
Joined: Wed Sep 10, 2014 3:24 pm

What are you earning on your fixed income?

Post by alwaysonit »

I can invest in a 4 year bond from the Irish govt earning an AER of 0.5%.
I think it's only available to Irish citizens or residents with a certain identity number.
https://www.statesavings.ie/media/pdf/s ... ure-4_10yr

Is there a better fixed income product out there for a Euro investor at the moment?
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galeno
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Re: What are you earning on your fixed income?

Post by galeno »

AGGG (unhedged global bonds) has a current yield = 0.88%. The euro hedged version is AGGH.

Yields of investment grade bonds in all major currencies are at historic lows.

Net yield on our FI = 0.88% (30% US Treas + 30% Corps + 30% TIPS + 10% CASH)

If we used 90% AGUG + 10% CASH = 0.79%.
KISS & STC.
Topic Author
alwaysonit
Posts: 81
Joined: Wed Sep 10, 2014 3:24 pm

Re: What are you earning on your fixed income?

Post by alwaysonit »

I'm struggling to understand what AGGG consists of - I assume there are some bonds in there with a higher risk of default than the Irish govt bond?

The bond I linked has an AER of 0.5% and is government insured so I'm trying to find out if there is an option just as safe with a better return out there.
oogZoo
Posts: 64
Joined: Mon Sep 02, 2019 12:05 pm

Re: What are you earning on your fixed income?

Post by oogZoo »

alwaysonit wrote: Sun Dec 06, 2020 5:50 am I'm struggling to understand what AGGG consists of
Why? You go to blackrock.com or ishares.com and you get an exact list what it consists of as well as breakdown per currency/geography/sector/maturity/credit quality: https://www.ishares.com/uk/individual/e ... s-etf-fund
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gasman
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Re: What are you earning on your fixed income?

Post by gasman »

Bupkis
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Schlabba
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Re: What are you earning on your fixed income?

Post by Schlabba »

alwaysonit wrote: Sat Dec 05, 2020 5:03 am I can invest in a 4 year bond from the Irish govt earning an AER of 0.5%.
I think it's only available to Irish citizens or residents with a certain identity number.
https://www.statesavings.ie/media/pdf/s ... ure-4_10yr

Is there a better fixed income product out there for a Euro investor at the moment?
Better for what?

If the point of the bonds is to provide a safe haven for your money, then your current holding is just fine. If you would like a little less volatility, you could choose to switch to the global aggregate bond market hedged to Euro. I use the Vanguard Global Aggregate Bond UCITS ETF for that.

If you are looking for a higher return on bonds, I am afraid that I have to disappoint you that you cannot find a higher return on a safe investment these days. I could suggest more risky alternatives but it really depends on what you are looking for with the money you allocated to this.
Valuethinker
Posts: 42149
Joined: Fri May 11, 2007 11:07 am

Re: What are you earning on your fixed income?

Post by Valuethinker »

alwaysonit wrote: Sat Dec 05, 2020 5:03 am I can invest in a 4 year bond from the Irish govt earning an AER of 0.5%.
I think it's only available to Irish citizens or residents with a certain identity number.
https://www.statesavings.ie/media/pdf/s ... ure-4_10yr

Is there a better fixed income product out there for a Euro investor at the moment?
The process of hedging a bond fund to the Euro will lower its return to more or less that of the Eurozone bonds.

The Eurozone govt bond index itself is heavily weighted to Italy which is not credit risk free.

An unhedged bond fund is simply a currency play. You are taking full risk of currency movements which will becfar greater than the income return from the bonds.

Risk free Eurozone bonds are paying minus 1 or 2 per cent yields. This investment is paying 1.5 to 2.5 % more than that. If you make a bet on Irish hovt creditworthiness.

My view is Ireland has been through its hell and gone out the other side. Whatever happens to Italy Ireland has graduated to the safe club of Eurozobe borrowers (statement of opinion from anonymous bloke on the internets).

I'd take what the Irish govt has on offer before they take it away from you. UK National Savings hasn't had an offer like that in quite a while.
Deontic
Posts: 37
Joined: Mon Jan 18, 2016 12:19 pm

Re: What are you earning on your fixed income?

Post by Deontic »

Stable Value Fund within 401k yielding 1.85%.
xxd091
Posts: 240
Joined: Sun Aug 21, 2011 4:41 am
Location: UK

Re: What are you earning on your fixed income?

Post by xxd091 »

I use Vanguard Global Bond Index Fund hedged to the pound (VIGBBD) as the Bond Asset Allocation portion of my Portfolio
Returned over 4.5% pa over the last 11 years-Vanguard website
Puts stability in my portfolio
Returns are a bonus
I am a U.K. citizen-is this fund available to you?
xxd091
houseofnine
Posts: 156
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Re: What are you earning on your fixed income?

Post by houseofnine »

Deontic wrote: Sun Dec 06, 2020 7:03 pm Stable Value Fund within 401k yielding 1.85%.
Same here only 3%. It represents the majority of my fixed income allocation. Enjoying it while it lasts...
Valuethinker
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Re: What are you earning on your fixed income?

Post by Valuethinker »

Deontic wrote: Sun Dec 06, 2020 7:03 pm Stable Value Fund within 401k yielding 1.85%.
OP is Irish, not American.

As far as I know, there's nothing like a Stable Value Fund in Europe.
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avenger
Posts: 894
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Re: What are you earning on your fixed income?

Post by avenger »

Stable value fund yielding 2.68%
cheers ... -Mark | "Our life is frittered away with detail. Simplify. Simplify." -Henry David Thoreau | [VTI, VXUS, VWITX, SV fund]
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