Fixed income portfolio allocation

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Topic Author
a_significant_order
Posts: 5
Joined: Tue Mar 28, 2023 9:37 am

Fixed income portfolio allocation

Post by a_significant_order »

Hi everyone! This is my first post ever on the forum.

I'm from Malaysia and there are no dividend and capital gains tax here.

Long story short my dad passed away not long ago and left me with a large inheritance, mum is currently battling stage 4 lung cancer.

My portfolio now consists of 100% VWRA but I'm looking to dilute this and allocate 30% towards fixed income to cover my mum's medication which means I'm looking for fixed income instruments that are able to provide a steady stream of income at less volatility than equities.

I'm been reading so much about bonds but still can't seem to grasp how I can appropriate allocate this in my portfolio. I'm hoping to get at least a 4% average total return on my fixed income holdings.

Was thinking of allocating 5% to UCITS versions of BND, 5% to BNDX, 10% to TIPS and 10% to a higher yield bond ETF such as AGG. What are some suggestions? Is now a good time to get into bonds as prices are relatively low?

I also have the option to purchase Singaporean and Australian treasury bonds direct from the source.

Am comfortable with a 20% drawdown as I have emergency funds for my mum and I allocated to term deposits already.

Many thanks! :sharebeer
Topic Author
a_significant_order
Posts: 5
Joined: Tue Mar 28, 2023 9:37 am

Re: Fixed income portfolio allocation

Post by a_significant_order »

Bump!
Lucky2Invest
Posts: 125
Joined: Wed Mar 23, 2016 6:07 pm

Re: Fixed income portfolio allocation

Post by Lucky2Invest »

There are plenty of ways to get 4% in the safest way possible at the moment. Treasury’s are yielding 4%-5%. Can buy a bunch of CDs at the $250k fdic limit yielding 5%. It doesn’t get any safer than this so you wouldn’t have to worry about any 20% drawdown, or drawdown of any kind.

So if 4% truly is the benchmark for you, it’s as easy and safe as can be.
daviddem
Posts: 275
Joined: Wed Jul 06, 2016 12:53 pm

Re: Fixed income portfolio allocation

Post by daviddem »

a_significant_order wrote: Tue Mar 28, 2023 9:51 am Hi everyone! This is my first post ever on the forum.

I'm from Malaysia and there are no dividend and capital gains tax here.

Long story short my dad passed away not long ago and left me with a large inheritance, mum is currently battling stage 4 lung cancer.

My portfolio now consists of 100% VWRA but I'm looking to dilute this and allocate 30% towards fixed income to cover my mum's medication which means I'm looking for fixed income instruments that are able to provide a steady stream of income at less volatility than equities.

I'm been reading so much about bonds but still can't seem to grasp how I can appropriate allocate this in my portfolio. I'm hoping to get at least a 4% average total return on my fixed income holdings.

Was thinking of allocating 5% to UCITS versions of BND, 5% to BNDX, 10% to TIPS and 10% to a higher yield bond ETF such as AGG. What are some suggestions? Is now a good time to get into bonds as prices are relatively low?

I also have the option to purchase Singaporean and Australian treasury bonds direct from the source.

Am comfortable with a 20% drawdown as I have emergency funds for my mum and I allocated to term deposits already.

Many thanks! :sharebeer
If you invest in USD just purchase a money market mutual fund or ETF. They yield 4.5 to 5% and are very short duration so they don't loose value when interest rates increase, unlike longer duration bond funds. They invest exclusively in debt of governments or companies with very high credit rating.

Some of them invest exclusively in treasuries, others have more exposure to short term debt of private institutions, mostly banks.

Also do not purchase US-domiciled funds for withholding and estate tax reasons (read the wiki).
Topic Author
a_significant_order
Posts: 5
Joined: Tue Mar 28, 2023 9:37 am

Re: Fixed income portfolio allocation

Post by a_significant_order »

Hi! Thanks so much for your reply to my post.

Yes, I'm already investing in Irish-domiciled ETFs like VWRA as you recommended. :sharebeer

Would be great if you could recommend some money market fund/ ETF tickers so I can go research.

I'm thinking for my long-term portfolio and want to start allocating to it now.

What I have in mind now for a balanced fixed income portfolio is Irish-domiciled versions of: 15% TIPS (for inflation protection), 35% iBOND treasuries (for recession protection) and 50% high-yield (for higher income).

I used this tool from iShares to create my treasury and high yield bond ladder: https://imgur.com/a/Md3lrjS

What do you think of this low-cost fixed income portfolio?

Another actively managed option that I'm looking into is Endowus's Steady Income portfolio, which comes with higher costs of course: https://endowus.com/income?strategy=Inc ... e%20Income

Thanks!! 8-)
Last edited by a_significant_order on Wed Mar 29, 2023 4:42 am, edited 1 time in total.
Topic Author
a_significant_order
Posts: 5
Joined: Tue Mar 28, 2023 9:37 am

Re: Fixed income portfolio allocation

Post by a_significant_order »

Lucky2Invest wrote: Tue Mar 28, 2023 9:28 pm There are plenty of ways to get 4% in the safest way possible at the moment. Treasury’s are yielding 4%-5%. Can buy a bunch of CDs at the $250k fdic limit yielding 5%. It doesn’t get any safer than this so you wouldn’t have to worry about any 20% drawdown, or drawdown of any kind.

So if 4% truly is the benchmark for you, it’s as easy and safe as can be.
Hi! Thanks a lot for looking into my post.

I will look into CDs for funds where minimal volatility is preferred.

What I have in mind now for a balanced fixed income portfolio is Irish-domiciled versions of: 15% TIPS (for inflation protection), 35% iBOND treasuries (for recession protection) and 50% high-yield (for higher income).

I used this tool from iShares to create my treasury and high yield bond ladder: https://imgur.com/a/Md3lrjS

What do you think of this low-cost fixed income portfolio?

Another actively managed option that I'm looking into is Endowus's Steady Income portfolio, which comes with higher costs of course: https://endowus.com/income?strategy=Inc ... e%20Income

Thanks!! 8-)
DJN
Posts: 996
Joined: Sun Nov 19, 2017 11:30 pm

Re: Fixed income portfolio allocation

Post by DJN »

Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
User avatar
galeno
Posts: 2653
Joined: Fri Dec 21, 2007 11:06 am

Re: Fixed income portfolio allocation

Post by galeno »

1.IUAG = aggregate US bonds. like BND

https://www.morningstar.co.uk/uk/etf/sn ... 0P0000UCAN

Or

2. AGGG = aggregate world bonds. like BNDW

https://www.morningstar.co.uk/uk/etf/sn ... 0P0001C9YH
KISS & STC.
Duckinson
Posts: 14
Joined: Sun Mar 26, 2023 10:57 pm

Re: Fixed income portfolio allocation

Post by Duckinson »

Lucky2Invest wrote: Tue Mar 28, 2023 9:28 pm There are plenty of ways to get 4% in the safest way possible at the moment. Treasury’s are yielding 4%-5%. Can buy a bunch of CDs at the $250k fdic limit yielding 5%. It doesn’t get any safer than this so you wouldn’t have to worry about any 20% drawdown, or drawdown of any kind.

So if 4% truly is the benchmark for you, it’s as easy and safe as can be.
Can you please provide some examples of CDs thatare FDIC insured and open to non US residents? Thanks!
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