bonds

[shadows]

Hi there,
I’m fishing around for any opinions on bond investments. The Tawara No Road Developed country bonds looks solid any thoughts to compare what’s else might be a good option?

Cheers!

Tawara No Road Developed country bonds
Operation policy

Through the "Foreign Bond Passive Fund/Mother Fund", we will invest mainly in overseas public and corporate bonds, aiming for investment results linked to the FTSE World Government Bond Index (excl. Japan, yen-based, no currency hedging). In order to increase linkage with the FTSE World Government Bond Index (excluding Japan, yen-based, no currency hedging), securities futures trading, etc. may be used. As a general rule, we do not hedge against the yen.

[TokyoBoglehead]

Hi there,
I’m fishing around for any opinions on bond investments. The Tawara No Road Developed country bonds looks solid any thoughts to compare what’s else might be a good option?

Cheers!

Tawara No Road Developed country bonds
Operation policy

Through the "Foreign Bond Passive Fund/Mother Fund", we will invest mainly in overseas public and corporate bonds, aiming for investment results linked to the FTSE World Government Bond Index (excl. Japan, yen-based, no currency hedging). In order to increase linkage with the FTSE World Government Bond Index (excluding Japan, yen-based, no currency hedging), securities futures trading, etc. may be used. As a general rule, we do not hedge against the yen.

Best options

Emaxis Slim Advanced Government Bonds /ｅＭＡＸＩＳ Ｓｌｉｍ 先進国債券インデックス

https://www.rakuten-sec.co.jp/web/fund/ ... 90C000END3

Rakuten Total Bond Index 楽天・全世界債券インデックス（為替ヘッジ）ファンド

(This is Vanguard BNDW, but hedged and in yen).

https://www.rakuten-sec.co.jp/web/fund/ ... 90C000HBG4

....................................................................

(Mostly assembled from info from this board and Japane finance

http://www.retirejapan.com/forum/viewto ... 6a1#p21188

[shadows]

many thanks for the reply. hmmm... hedged vs. non hedged. it's like flipping a coin. I'm no expert reading Kaiji but do all these bond funds have required holding periods?

[TokyoBoglehead]

many thanks for the reply. hmmm... hedged vs. non hedged. it's like flipping a coin. I'm no expert reading Kaiji but do all these bond funds have required holding periods?

You can split the difference 50/50 and go 1 hedged and 1 non-hedged. No required holding periods as far as I know. Both these two and your selection are decent choices.

I personally would buy the Emaxis and only consider the hedged as I approach retirement. However I am 100% equities currently.

Finally, also consider buying bonds directly.

[Tkydon]

Remember, in this era of uncertain interest rates:

Bonds decrease in Face Value as Interest Rates / Yields rise

Bonds increase in Face Value as Interest Rates / Yields fall

The success of Bonds over the last 30 years was due to the continual fall in Interest Rates pushing the Face Value of the Bonds up.

In the last year, the Yen weakened vs US Dollar as US Interest Rates rose

In the future, the Yen may strengthen vs Dollar as US Interest Rates fall


If US Interest Rates rise and the Face Value of US Bonds decreases, but the Yen Weakens, the cost in Yen will increase, so the two may balance out

If US Interest Rates fall and the Face Value of US Bonds increases, but the Yen Strengthens, the value in Yen will decrease, so the two may balance out

[TokyoBoglehead]

Remember, in this era of uncertain interest rates:

Bonds decrease in Face Value as Interest Rates / Yields rise

Bonds increase in Face Value as Interest Rates / Yields fall

The success of Bonds over the last 30 years was due to the continual fall in Interest Rates pushing the Face Value of the Bonds up.

In the last year, the Yen weakened vs US Dollar as US Interest Rates rose

In the future, the Yen may strengthen vs Dollar as US Interest Rates fall


If US Interest Rates rise and the Face Value of US Bonds decreases, but the Yen Weakens, the cost in Yen will increase, so the two may balance out

If US Interest Rates fall and the Face Value of US Bonds increases, but the Yen Strengthens, the value in Yen will decrease, so the two may balance out

If one purchases a physical bond and holds for the duration these concerns become mute as returns are guaranteed.

[Tkydon]

If one purchases a physical bond and holds for the duration these concerns become mute as returns are guaranteed.

Only in the Denominated Currency

If you buy a US Bond now at Y135 and it goes back to Y110, then you lose 18.5%

[TokyoBoglehead]

If one purchases a physical bond and holds for the duration these concerns become mute as returns are guaranteed.

Only in the Denominated Currency

If you buy a US Bond now at Y135 and it goes back to Y110, then you lose 18.5%

Absolutely. OP could hedged as well or DCA.

[shadows]

Many thanks again for your thoughtful comments in bonds.

It seems as though the real elephant in the room is the uncertainty of the currency strengths.
These resent jpn/usd swings can be crippling for specific time periods in ones investments.
There seems to be too much uncertainty looking at all the variables and so one would imagine DCA as the best option,
at least until currencies become more stable.

Makes me wonder about bond face values, potentially doing this, that and the other thing, perhaps it's better NOT to get into a bond fund now
and just top up on emaxis all country....hmmm maybe too aggressive. 100-0 or 80-20....? I mean it's not like it's difficult having passive income living in Japan, right?

[TokyoBoglehead]

Many thanks again for your thoughtful comments in bonds.

It seems as though the real elephant in the room is the uncertainty of the currency strengths.
These resent jpn/usd swings can be crippling for specific time periods in ones investments.
There seems to be too much uncertainty looking at all the variables and so one would imagine DCA as the best option,
at least until currencies become more stable.

Makes me wonder about bond face values, potentially doing this, that and the other thing, perhaps it's better NOT to get into a bond fund now
and just top up on emaxis all country....hmmm maybe too aggressive. 100-0 or 80-20....? I mean it's not like it's difficult having passive income living in Japan, right?

Did you put any thought into currency hedged products?