Thoughts and feedback on the ETF portfolio

jamesd

If you are considering a career in politics you may want to avoid investing in offshore investments like those.

pizza_lord

racing_blue wrote: »

Totally agree with you here. But... why not 100% cash, if you think that (for the defensive 40% of your portfolio)?

Really short term bonds pretty much always out-perform cash, no?

bowlhead99

pizza_lord wrote: »

Really short term bonds pretty much always out-perform cash, no?

Correct: "no".

As mentioned in my post #15 above, the us treasuries maturing 1-3 years are only yielding 0.5-1%. So, no that's not a level that outperforms cash really.

Very short term government bonds are safe and may have negative yield because there is such demand for them as a safe haven - for example for a pension fund which needs to deploy a few hundred million and not have the risk of losing it to the vagaries of "the market". As a consumer using normal retail banking for sums much smaller than a few hundred million, with full consumer retail protection in case of banking collapse, you can easily have a bank product that's pretty much as safe as a bond that's about to mature, while paying an equal or higher yield.

As you noted in post #25, if the expected return on a bond or bond fund is low, you can achieve that by simply leaving the money in the bank. Short dated bonds have lower investment risk than long dated bonds but that makes then yield less, not more - so it's definitely not true to say short dated bonds always pay better than cash.