New bond ETFs are very helpful

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dutchtraffic
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New bond ETFs are very helpful

Post by dutchtraffic » Mon Mar 05, 2018 3:16 pm

The new global bond ETFs hedged to local currency are very helpful to fix some problems, especially for europeans who didn't know which bonds to buy or simply do not want to hold strictly european bonds. (can't blame them)

They are:
iShares Global Aggregate Bond (EUR Hedged) UCITS ETF ISIN: IE00BDBRDM35 (euro hedged)
SPDR Bloomberg Barclays Global Aggregate Bond UCITS ETF - ISIN: IE00BF1QPL78 (euro hedged)


I've edited my (extremely conservative) portfolio as well which is inspired by the PP:
I picked this portfolio because I want to limit the amount of stocks due to silly valuations, and limit the bond duration because interest rates are
going to have to go up at some point. And returns still look very solid. I think this will be very easy to stick with.

20% Vanguard Global Momentum Factor UCITS ETF - ISIN: IE00BYYR0935
32.5% iShares Global Aggregate Bond (EUR Hedged) UCITS ETF ISIN: IE00BDBRDM35
32.5% PIMCO Euro Short Maturity ETF - PJS1 - ISIN: IE00B5ZR2157
15% ZKB GOLD ETF AA EUR - ISIN: CH0047533523

Using 50% of the bond etf, 25% global stocks, 25% gold, a "Global PP-like" portfolio is now also possible.
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europeanwizard
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Re: New bond ETFs are very helpful

Post by europeanwizard » Mon Mar 05, 2018 11:59 pm

This is extremely interesting to me... "hedged to local currency" here means that the forex risk is hedged? I.e. you don't run currency risk when you hold this ETF in euros? I suspect this is a costly affair?

This may be a solution to the exasperating problem that we Europeans have, with the crazy bonds.
dutchtraffic
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Re: New bond ETFs are very helpful

Post by dutchtraffic » Tue Mar 06, 2018 2:03 am

europeanwizard wrote:This is extremely interesting to me... "hedged to local currency" here means that the forex risk is hedged? I.e. you don't run currency risk when you hold this ETF in euros? I suspect this is a costly affair?

This may be a solution to the exasperating problem that we Europeans have, with the crazy bonds.
Yes, it means there is no more currency risk, the costs vary, and can be profitable or not, depending on the difference between the interest rates between the 2 currencies, you can read more about it here: https://personal.vanguard.com/pdf/ISGHC.pdf
dutchtraffic
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Re: New bond ETFs are very helpful

Post by dutchtraffic » Tue Mar 06, 2018 11:53 am

For europeans that want a US style PP, you can now also buy US longterm bonds hedged to euros.

https://www.ishares.com/uk/institutiona ... titutional
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