Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Discussion of the Bond portion of the Permanent Portfolio

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Jeffreyalan
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by Jeffreyalan » Mon Feb 12, 2018 10:13 pm

Right now yes. But since the fund description/prospectus says only that the fund invests in 10+ year bonds, I wonder if we can always count on them being as long as TLT?
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sophie
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by sophie » Tue Feb 13, 2018 6:52 am

Go Vanguard. I wonder what prompted that move?

I've got a standard Boglehead stock/bond portfolio in my retirement accounts, and I've been wondering about switching part or all of total bond (BND) for VGLT. It should provide a better rebalancing boost, whereas BND can't do that - its job is to stay more or less steady and dampen stock swings. Anyone else done something like that?
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by stuper1 » Tue Feb 13, 2018 9:46 am

Sophie, I checked out your suggestion at portfoliovisualizer.com using VTSMX for stocks, VBMFX for total bond market, VFITX for intermediate Treasuries, and VUSTX for long Treasuries. The data sets go back to 1993. Using a 60/40 split to stocks and bonds, the CAGR with total bonds is 8.40%, with intermed T's is 8.55%, and with long T's is 9.45%. The versions with Treasuries have lower max drawdowns and better Sharpe and Sortino ratios.

I guess the million dollar question is whether these results would repeat if we are going into a rising bond yield period? I guess if some part of the extra performance comes from rebalancing, that will mitigate the rising yields, so maybe at worst the version with Treasuries will be similar to the version with total bond market, or possibly the version with Treasuries will continue to out perform.
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by dualstow » Tue Feb 13, 2018 10:37 am

Jeffreyalan wrote:Right now yes. But since the fund description/prospectus says only that the fund invests in 10+ year bonds, I wonder if we can always count on them being as long as TLT?
sophie wrote:Go Vanguard. I wonder what prompted that move?
Looks like they're tracking the Bloomberg Barclays US Long Treasury Bond Index, according to the prospectus.
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by Tyler » Tue Feb 13, 2018 11:48 am

Jeffreyalan wrote:How about VGLT maturity and duration vs TLT? I know right now they look similar. But TLT descrption is 20+ year treasuries. VGLT is only 10+.
Because of the way indices typically build and weight holdings, it wouldn't surprise me if VGLT will always skew towards the longer end even with the 10-30 year allowable range in its prospectus. But even if they were to evenly distribute their bonds between 10-30 years, the average effective maturity would still be 20 years vs. 25 in TLT. Because of the way yield curves tend to flatten out past 10 years, I would not expect to see a huge performance difference.

Personally, I'm really happy to see Vanguard commit to treasuries and I think VGLT would be a fine addition to anyone's Permanent Portfolio.
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Ugly_Bird
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by Ugly_Bird » Tue Feb 13, 2018 7:53 pm

rudiger wrote:According to
This means the Vanguard Long-Term Treasury Index Fund (VGLT) is a bit more suitable for the bond component of the Permanent Portfolio and related strategies.
This is good news. My Vanguard IRA is part of the PP. The IRA account consists of 33% VFIAX and 67% VLGSX. So it's kind of a lopsided Bogleheads subset inside of the PP. It is fun to watch it's behavior and now it is even more suitable for PP.
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Re: Vanguard changes 3 government bond index funds and ETFs to pure Treasury indexes

Post by murphy_p_t » Thu Oct 04, 2018 11:38 am

For the retail investor implementing the traditional permanent portfolio, it seems like VLGSX is the way to go?

avoid the need to sell a 20-year Bond and purchase a 30-year Bond? Along with Associated capital gain.

In terms of holding this in a taxable account, seems there is no particular concern like there is with EDV?
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