BND and AGG are both up by a similar 6.4% and 6.3% year to date. The closest thing to a fund charges hedge fund like expense ratios and has a $250K minimum. Exactly. 1Exposure to a broad range U.S. municipal bonds 2Access to 2000+ municipal bonds in a single fund 3Use to seek tax-exempt income GROWTH OF 10,000 USD SINCE … If you make 16% in two years, that annualizes out to 8% a year (actually slightly less.). GO bonds are issued to raise instant capital to cover expenses, and are backed by the taxing power of the issuer. If I figure my time is worth, after-tax, $100 an hour, I think I'm probably doing okay for now paying Schwab or Vanguard to handle this. Like other forms of debt, when you purchase a municipal bond, you are loaning money to the issuer in exchange for a set number of interest payments over a predetermined period of time. 3.50% BND or MUB. The reverse can happen too. Since BND holds corporate bonds, it is NOT immune to the issues this post is about. This … I’d like to have a specific allocation to TIPS, but there isn’t a TIPS fund in my 403(b) so the only way I’d be able to do that is in my Roth IRA, HSA, or taxable account, and so when combined with my age I’ve concluded its not worth it at present to hold TIPS funds in those accounts. I do as well use BND as the bond allocation. This is a rather fine point of portfolio construction. BND . Bad behavior of other investors in the fund (or the fund managers) is also minimized with a relatively safe fund like a treasury/TIPS fund at a place like Vanguard, Fidelity, or Schwab. There are about 39 distinct municipal bond ETFs that trade in the U.S., excluding inverse and leveraged ETFs and funds with less than $50 million in … For those investors with a more conservative bent, seeking more capital preservation and less growth at this point, municipal bonds and their associated ETFs might be a good place to park funds. My amount is quite small, and for simplicity I just hold TIPS and US Treasury Bonds through ETFs. I just find it interesting how often these two seem to diverge. Follow Us. Under 1Year 1.0 % 1-3Years 26.1 % 3-5Years 28.8 % 5-10 Years 22.4 % 10 -20 Years 5.8 % 20 -30 Years 14.9 % Over 30 Years 1.0 %. During a financial disturbance, when liquidity becomes even thinner and most corporate bonds trade only “by appointment,” the AP mechanism fails, often at considerable disadvantage to the shareholder. For a $100K allocation, 10 basis points is $100 a year. Not exactly breaking the bank. While we're at it, we might as well take a look at what Bernstein does recommend you do with your bonds. ETFs are great. Interest rates are so low I prefer not to leave it in a savings account. Frankly, if you’re a military resident, just work on maxing out your Roth IRA (stick it in a target date fund at Vanguard) and your Roth TSP (stick it in an L fund with the same date.) Bond ETFs provide auto-reinvestment, which can lead to greater compounded performance over time, monthly distributions for liquidity, and arguably better overall trading cost/liquidity than a individual bond ladder. But Bernstein would suggest you use the fund instead of the ETF. I would agree with Bernstein outside of Vanguard ETFs. Municipal bonds tend to have lower yield to compensate for this tax advantage. Mom, are you saying that because of the patentent structure Vanguard has that BND is immune to the problems this post is about? BND (Vanguard Total Bond Market Index ETF) may be a poor choice for your taxable account depending on your tax bracket. Hi all I am new to all of this– senior resident. During the downdraft peaking on 2/11/2016, SCHP and TIPS _ APpreciated_. 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