[ITA] Portfolio advice regarding AGGH [iShares Core Global Aggregate Bond UCITS ETF]

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Topic Author
RadiantRhapsody
Posts: 2
Joined: Sun Feb 26, 2023 4:08 am

[ITA] Portfolio advice regarding AGGH [iShares Core Global Aggregate Bond UCITS ETF]

Post by RadiantRhapsody »

Country of Residence: Italy

International Lifestyle: Flexible, currently not planning to relocate but if some specific situation happens, I might (probably to easten/nordic europe)

Currency: EUR
Emergency funds: 6 months

Debt: no debts

Age: 35-40

Desired Asset allocation: this is part of my question
Desired allocation to stocks outside your of country of residence: Only ETFs

Mid five figures

_______________________________________________________________

Current retirement assets

General investment account, taxable
80% of ETF
  • 70% IWDA
    20% EMIM
    10% IUSN
20% of BONDS
  • 100% EUNA/AGGH
_______________________________________________________________

If you are currently investing into these accounts, it may help us to have an idea of how much you invest annually. As above, if this section does not apply to you, or if it does but you do not want to share this information, please ignore this section.

New investments

I am not sure about it, I am about to buy an apartment so I might not be able to invest for some time.
Otherwise maybe 20k per year.

_______________________________________________________________
Questions:
1. My questions is mainly regarding the bonds. I am no expert in investments and I have read about the easiest approaches to it which were ETF.
As I understand ETFs are already balanced and diversified so the risk is way lower than single companies stocks (even less rewards, but I am fine with it). I also diversified among ETFs, having a world index, small caps, and emerging markets.

To make it even safer, I understood to counterbalance the ETFs with some bonds. If I understand correctly, when the market goes down, bonds should go a bit up, compensating your losses (at least part of it). I started investing in March 2020, since then the market had a trend downwards, but the AGGH index didn't actually have a good performance at all.The last months, despite the market is not skyrocketing, it seems that the bonds went down quite a lot.

So my question is what should I do with it? Keep it for long term, sell with a loss and reinvest in a more aggressive ETF?
Also, are my assumptions about how the bonds/etfs work good?

Thanks in advance
Valuethinker
Posts: 49030
Joined: Fri May 11, 2007 11:07 am

Re: [ITA] Portfolio advice regarding AGGH [iShares Core Global Aggregate Bond UCITS ETF]

Post by Valuethinker »

One of the things which fascinates me is the extent to which posters always use the ticker codes for funds/ ETFs (and for that matter never post a link to a factsheet or web page for that fund).

Who are these people who carry these around in their head? It's a bit like reading a foreign language where you don't have much vocabulary - the nouns are just big blanks.
TedSwippet
Posts: 5181
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: [ITA] Portfolio advice regarding AGGH [iShares Core Global Aggregate Bond UCITS ETF]

Post by TedSwippet »

Valuethinker wrote: Sun Feb 26, 2023 9:12 am One of the things which fascinates me is the extent to which posters always use the ticker codes for funds/ ETFs (and for that matter never post a link to a factsheet or web page for that fund).
As it happens, you can find detail on all of the ETFs mentioned in the original post in our wiki:

https://www.bogleheads.org/wiki/List_of ... _ETFs#IWDA
https://www.bogleheads.org/wiki/List_of ... _ETFs#EMIM
https://www.bogleheads.org/wiki/List_of ... _ETFs#IUSN
https://www.bogleheads.org/wiki/List_of ... _ETFs#EUNA
Valuethinker wrote: Sun Feb 26, 2023 9:12 am Who are these people who carry these around in their head? It's a bit like reading a foreign language where you don't have much vocabulary - the nouns are just big blanks.
It's the topic author's very first post, so cutting a bit of slack seems appropriate.

Anyway, their question is around bonds, and I know this to be your area far more than it is mine. I'm not equipped to address it. My view of bonds is broccoli -- probably good for you, but hard to see why, and not really likable or popular. :-)
jg12345
Posts: 427
Joined: Fri Dec 11, 2020 12:03 pm

Re: [ITA] Portfolio advice regarding AGGH [iShares Core Global Aggregate Bond UCITS ETF]

Post by jg12345 »

Hi OP
Buongiorno

Bonds might go down when stocks go down. They are likely to go down less. At the moment both bonds and stocks are responding to interest rates. An almost mathemathical rule for bonds, but not straightforward for stocks.

With that said, there is no other publicly available asset that is as diversified and as uncorrelated with stocks.

I presume you are investing not to buy the apartment in the next couple years, but you are investing for retirement at 65 or so.

If that's the case, you can
1) keep AGGH as proposed
2) put your 20 percent in a conto deposito (make sure it never goes above 100k)

Best
Topic Author
RadiantRhapsody
Posts: 2
Joined: Sun Feb 26, 2023 4:08 am

Re: [ITA] Portfolio advice regarding AGGH [iShares Core Global Aggregate Bond UCITS ETF]

Post by RadiantRhapsody »

Valuethinker wrote: Sun Feb 26, 2023 9:12 am One of the things which fascinates me is the extent to which posters always use the ticker codes for funds/ ETFs (and for that matter never post a link to a factsheet or web page for that fund).

Who are these people who carry these around in their head? It's a bit like reading a foreign language where you don't have much vocabulary - the nouns are just big blanks.
Sorry about that, I filled the template I found in the forum and I didn't think about providing more information about each one of them
jg12345 wrote: Sun Feb 26, 2023 11:02 am Hi OP
Buongiorno

Bonds might go down when stocks go down. They are likely to go down less. At the moment both bonds and stocks are responding to interest rates. An almost mathemathical rule for bonds, but not straightforward for stocks.

With that said, there is no other publicly available asset that is as diversified and as uncorrelated with stocks.

I presume you are investing not to buy the apartment in the next couple years, but you are investing for retirement at 65 or so.

If that's the case, you can
1) keep AGGH as proposed
2) put your 20 percent in a conto deposito (make sure it never goes above 100k)

Best
, I will try to be more precise from now on.

Thanks for the answer. My original goal was to invest for mid-long term results, maybe achieving some financial freedom to decide not to work if I wanted to. In terms of numbers I thought about having 300k invested, if more then even better.

I am not looking for incredible returns rates of 30% or so, IWDA for example averaged something around 10% since its inception:

Code: Select all

Year	Average Annual Return Rate
2009	-4.53%
2010	11.77%
2011	-6.83%
2012	16.04%
2013	26.08%
2014	6.71%
2015	-0.75%
2016	7.73%
2017	22.08%
2018	-9.85%
2019	27.09%
2020	3.47%
2021	17.03%
For an overall average of 9%.

AGGH:

Code: Select all

Year	Average Annual Return Rate
2013	N/A (inception on 05 Dec)
2014	6.92%
2015	0.38%
2016	2.11%
2017	-0.25%
2018	-3.45%
2019	8.89%
2020	7.19%
2021	-0.36%
For an overall average of 3%.

With a portfolio of 7% average return it would probably cover nicely the cost of living, plus some extra, but AGGH is pulling down this return.

So the next question is, why it is good to keep the bonds? Are the other ETFs so medium-high risk that require AGGH as a counterweight?

Thanks
jg12345
Posts: 427
Joined: Fri Dec 11, 2020 12:03 pm

Re: [ITA] Portfolio advice regarding AGGH [iShares Core Global Aggregate Bond UCITS ETF]

Post by jg12345 »

WHy is it good to keep bonds?

mostly to limit the fall and avoid you selling in times of stock market.

If you want to maximize return, without considering volatility, then 100% stocks is the way to go.
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