VANGUARD BOND ETFS- EDV OR VGLT
Posted: Sun Mar 06, 2011 11:10 pm
Which Vanguard bond etf is better for the pp. Thanks
PP bonds are supposed to be 25-30 year Treasury bonds and neither ETF follows that recipe. VGLT holds 10-25 year bonds and mixes in non-Treasury government bonds. EDV holds zero coupon bonds which are significantly more volatile than nominal bonds.
MediumTex has suggested a 50-50 split between VGLT and EDV as a compromise. That combo does seem to behave similarly to pure long term nominal bonds, though it's a bit of a witches' brew.
I'm a Vanguard investor and prefer to keep things simple and buy TLT. Any time you tamper with an asset or make things more complex, you increase the risk of the portfolio failing to work as designed. The $7 commission on TLT pales in comparison to losing a few percent of the whole portfolio.