What are people's thoughts on using the PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund for the bond portion?
http://www.pimcoetfs.com/Funds/Pages/PI ... l=fund_nav
It is listed under ticker symbol ZROZ
http://finance.yahoo.com/q?s=ZROZ
Would this be more or less volatile than 30-year bonds? What are the advantages or disadvantages?
The PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund
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Re: The PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund
Would it be a good idea to lower the percentage in line with the more powerful volatility, or is the view "the more power the better!"MangoMan wrote: Basically the same as using EDV. I personally prefer Vanguard to PIMCO, but YMMV.
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Re: The PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund
I've posted a few threads on this subject. I think that it makes sense to line up the volatilities of the standard PP assets, so, for example, exchanging TLT for ZROZ or bonds for zeroes can actually bring bonds closer in line with the volatilities of the other assets. There's certainly no problem with not doing it, though. It just means that bonds are a little weaker than stocks and certainly gold.LC475 wrote:Would it be a good idea to lower the percentage in line with the more powerful volatility, or is the view "the more power the better!"MangoMan wrote: Basically the same as using EDV. I personally prefer Vanguard to PIMCO, but YMMV.
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Re: The PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund
I use them (about 25 % of the LT part) in addition to the EURO bonds EFT as the € bonds have only a duration of 22 years. The ZROZ now has a duration of 27.3 years and therefore less volatile than the 30 years bond. ZROZ distribute 4 time a year dividend. This year 19% up . That is nice but also indicates how risky they are if interest goes up.
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Re: The PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund
No, more. 30 year has effective maturity of 17. Remember, regular 30 year bonds pay coupons, so that lowers the effective maturity.Thomas Hoog wrote: The ZROZ now has a duration of 27.3 years and therefore less volatile than the 30 years bond.