BND

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Eastcoaster212
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Joined: Tue Nov 12, 2019 6:41 pm

BND

Post by Eastcoaster212 »

Anyone see any downsides to growing a position on BND? While not as aggressively adding as much to equity side (already high)
Marseille07
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Re: BND

Post by Marseille07 »

I think the duration of BND may be too long for some folks. If your horizon is long, then it's a good choice.
rkhusky
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Re: BND

Post by rkhusky »

Eastcoaster212 wrote: Mon Aug 15, 2022 11:57 pm Anyone see any downsides to growing a position on BND? While not as aggressively adding as much to equity side (already high)
No, if your intent is to increase your allocation to bonds over time.
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vineviz
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Re: BND

Post by vineviz »

Eastcoaster212 wrote: Mon Aug 15, 2022 11:57 pm Anyone see any downsides to growing a position on BND? While not as aggressively adding as much to equity side (already high)
The only downside I see is the short duration.

But if you’re cool with interest rate risk, BND is a low cost way to get it.

IMHO, a long-term investor should be looking at long-term bonds.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
dbr
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Re: BND

Post by dbr »

Eastcoaster212 wrote: Mon Aug 15, 2022 11:57 pm Anyone see any downsides to growing a position on BND? While not as aggressively adding as much to equity side (already high)
The downside is whether or not you understand why you are doing this, meaning that it could be the obvious choice to meet your objectives or could be exactly not what you would want.

What is your plan? Funds are picked to support objectives.
delamer
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Re: BND

Post by delamer »

You should have a predetermined asset allocation that meets your needs and reflects your risk tolerance

Don’t “grow” a position in anything unless it’s needed to achieve that allocation.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
cbs2002
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Re: BND

Post by cbs2002 »

I did not fully understand duration and interest rate risk when I started allocating to BND and BIV. Fortunately I don't plan to touch these funds for at least ten years. It could have been a mistake for me if I needed the funds sooner. Live and learn and in this case no harm done. I have learned a lot about building a fixed-income position to cover multiple years of expenses prior to retirement. Eventually some of those BND/BIV dollars will serve that purpose after they rebound from the interest rate shocks.
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framus
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Re: BND

Post by framus »

Marseille07 wrote: Tue Aug 16, 2022 12:21 am I think the duration of BND may be too long for some folks. If your horizon is long, then it's a good choice.
I'm not sure I understand in what circumstances BND duration would be too long. Can you explain?
Thanks,
Framus
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WingsFan4Life
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Re: BND

Post by WingsFan4Life »

There's definitely a lukewarm reception to BND in this thread. One user says the duration is too long and another says the duration is too short. What fund should a boglehead invest in?
Marseille07
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Re: BND

Post by Marseille07 »

framus wrote: Tue Aug 16, 2022 2:15 pm I'm not sure I understand in what circumstances BND duration would be too long. Can you explain?
Thanks,
Framus
I'm not a bond expert but it can take 3~4 years for the NAV to recover (average duration (6.9 years) / 2 or something like that).
exodusNH
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Re: BND

Post by exodusNH »

WingsFan4Life wrote: Tue Aug 16, 2022 2:21 pm There's definitely a lukewarm reception to BND in this thread. One user says the duration is too long and another says the duration is too short. What fund should a boglehead invest in?
It's part of the "three fund portfolio". If you're not really sure what to use, it's a fine default choice. For people in the accumulation stage. As you switch to spending your portfolio, the metrics might change.
exodusNH
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Re: BND

Post by exodusNH »

framus wrote: Tue Aug 16, 2022 2:15 pm
Marseille07 wrote: Tue Aug 16, 2022 12:21 am I think the duration of BND may be too long for some folks. If your horizon is long, then it's a good choice.
I'm not sure I understand in what circumstances BND duration would be too long. Can you explain?
Thanks,
Framus
If you're 85, your spending needs probably aren't 7 years in the future.
delamer
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Re: BND

Post by delamer »

WingsFan4Life wrote: Tue Aug 16, 2022 2:21 pm There's definitely a lukewarm reception to BND in this thread. One user says the duration is too long and another says the duration is too short. What fund should a boglehead invest in?
A couple funds that have different maturities?

And/or a TIPS fund, since this fund doesn’t include them.

Product summary

The fund’s investment objective is to seek to track the performance of a broad, market-weighted bond index. The fund generally:

Provides broad exposure to the taxable investment-grade U.S. dollar-denominated bond market, excluding inflation-protected and tax-exempt bonds.
Offers relatively high potential for investment income; share value tends to rise and fall modestly.
May be more appropriate for medium- or long-term goals where you’re looking for a reliable income stream.
Is appropriate for diversifying the risks of stocks in a portfolio.


Source: https://investor.vanguard.com/investmen ... d#overview
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
jimkinny
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Re: BND

Post by jimkinny »

Maybe instead of BND buy an intermediate TIPS fund.
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