Gyroscopic Investing

In Craig's Bond FAQ he wrote:

What bond fund can I use to purchase Long Term Treasury Bonds?
There is only one at this time that is acceptable for use in the Permanent Portfolio:
iShares Treasury Long Term Bond ETF (Ticker: TLT)

Since he wrote that 10 years have there been any additional bond funds that have emerged and which you are using?

There are many now...go to etf.com or etfdb.com or just google Long Term Treasury Funds (or ETFs).

If you are in the ETF space I'd probably go with VGLT or SPLT which are 50% cheaper in mngt fees than TLT. EDV is an option as well. The main thing is to check duration and if you go with EDV you could probably dial down the allocation to say 18-20% and roll the difference into STTs/cash.

Bonds are the most complex asset in the PP. Given where interest rates are I tend to favor 50% ITTs vs. the LTT/Cash barbell.

Kbg wrote: ↑Thu Sep 19, 2019 9:07 am If you are in the ETF space I'd probably go with VGLT or SPLT which are 50% cheaper in mngt fees than TLT.

Thanks for posting these ETFs, Kbg. Just a slight correction: SPTL, not SPLT (a platinum ETF). I am 100% in actual bonds myself, but good to know there are alternatives to TLT. VGLT and SPTL seem to hold some (10%-ish) 10-to-20-year treasuries in addition to 20-to-30-years, but they are cheaper (0.06-0.07% vs 0.15%), as you say.

Kbg wrote: ↑Thu Sep 19, 2019 9:07 am Bonds are the most complex asset in the PP.

Not cash? Not gold? (Questioning as devil's advocate, with tongue in cheek.)

There have almost always been long-term government bond funds other than TLT.

I believe the reason Craig listed TLT as the “only” option is because he considered it mandatory for an LTT fund’s prospectus to require it to hold ONLY long-term Treasuries and nothing else. At the time, I think TLT was the only fund that satisfied that requirement.

And I think it might still be (haven’t checked). For example, VGLT’s prospectus only requires it to hold at least 80% LTTs, meaning that in theory, the other 20% could be anything. Currently, I think VGLT happens to be 100% invested in LTTs, but that’s not guaranteed to be the case tomorrow, next week, next month, etc.

Kbg wrote: ↑Thu Sep 19, 2019 9:07 am There are many now...go to etf.com or etfdb.com or just google Long Term Treasury Funds (or ETFs).

If you are in the ETF space I'd probably go with VGLT or SPLT which are 50% cheaper in mngt fees than TLT. EDV is an option as well. The main thing is to check duration and if you go with EDV you could probably dial down the allocation to say 18-20% and roll the difference into STTs/cash.

Bonds are the most complex asset in the PP. Given where interest rates are I tend to favor 50% ITTs vs. the LTT/Cash barbell.

I think I would put 25% in shv or cash instruments, then at this stage not put 25% in to long term bonds ....I would split it with maybe half in intermediate term treasuries and half in long term , maybe even 2/3s intermediate, 1/3 long term

Tortoise wrote: ↑Thu Sep 19, 2019 4:02 pm There have almost always been long-term government bond funds other than TLT.

I believe the reason Craig listed TLT as the “only” option is because he considered it mandatory for an LTT fund’s prospectus to require it to hold ONLY long-term Treasuries and nothing else. At the time, I think TLT was the only fund that satisfied that requirement.

And I think it might still be (haven’t checked). For example, VGLT’s prospectus only requires it to hold at least 80% LTTs, meaning that in theory, the other 20% could be anything. Currently, I think VGLT happens to be 100% invested in LTTs, but that’s not guaranteed to be the case tomorrow, next week, next month, etc.

You wrote the above on 9/18/19. Just so happened that the fund's fiscal year ended just 18 days earlier - August 31, 2020.

Looks like the facts support your thought of what was going on? Just about 100%. However, is it possible that the fund participates in "window dressing"? Selling off other holdings and replacing them with long-term Treasuries in the days leading up to year-end? How would we ever know?
Vinny

I guess you never really know for sure unless the prospectus guarantees that the fund holds only Treasuries at all times — which VGLT’s prospectus doesn’t.

Is there any reason to not do EDV for the LT portion other than the added volatility? I make my stock portion more volatile by focusing on more growth stocks and leaving out utility and consumer staple stocks. So I feel like the higher volatility of the two assets cancel each other out a bit.