I’ve changed my mind regarding European government bonds. Even though these bonds have negative yields and that isn’t great, I think they are still useful in a diversified portfolio. A high yield government-insured savings account can be an alternative, but it does not have some qualities unique to bonds. Currently my standard suggestion for Fixed […]
Over the long-term, currency hedging tends to make foreign bonds have similar returns to comparable domestic bonds. Given this, is it worth investing in currency hedged foreign bond ETFs? How does currency hedging actually work? The Portfolio I prefer includes two investments: An index fund tracking global equities. This fund should not be hedged. A […]
Given the low interest rate environment in the Eurozone, how can I know the expected returns of a bond fund so I can compare it to other safe assets (e.g. a savings account) ? I wrote before about the fact that the yields of Eurozone government bonds are low. Here, I want to explain how […]
Editor’s Note: that this blog post is in relation to the current macro economic outlook of the Eurozone (in February 2019). When that macro economic outlook changes this post may not be relevant. The problem with Eurozone government bonds is that yields are abnormally low. Yield can be understood as the annualized expected income (i.e. […]
If you live outside of the USA, the world’s largest financial market, investing in a globally diversified portfolio means you are getting significant exposure to foreign currency, typically USD. This means that changes in exchange rates between currencies will affect your returns. Should you expose yourself to these risks? Should you buy ETFs hedged to […]
The decision that will have the biggest impact on your investment returns is your asset allocation – the percentage you assign to equities and the percentage you assign to fixed income. Bonds are a popular way to generate predictable returns with lower risks – fixed income – but they aren’t the only one. A few […]
The Vanguard Total Bond Market ETF (BND) and Vanguard’s Intermediate-Term Bond ETF (BIV) are often recommended in personal finance literature as reasonable options for bond ETFs. What would be the comparable choices available for European investors? Similarly to my recommendations for equity funds, I think these suggestions may be useful for many investors but they […]
You’ve finally reached a decision regarding the equity component of your portfolio but aren’t sure on how to proceed regarding the fixed income part. You are looking to reduce the volatility of your portfolio but are not sure how to go about choosing a bond ETF. You shouldn’t invest in anything you don’t understand. The […]