Anyone else thinking of dumping their BNDX holdings?

[TokyoWart]

Well, there is the market condition of course, but of more immediate concern is that the price of BNDX has gone down 3.20% in yen terms since last summer. Since BNDX's annual yield is 4.20% or thereabouts, you'd need balls of steel to hang on to it under current conditions...

You need to expect even more than that level of variation in price for BNDX. Vanguard reports the difference between the 52 week high and low for BNDX as 4.77% for dollar-based investors which is not very much considering that for its larger bond fund BND the 52 week difference was over 7%. On top of that --this difference would sometimes add to and other times subtract from the numbers above-- you have the exchange rate variation between the USD-JPY which was around 10% in 2024. I don't own either of those funds because I don't like bonds but I would not make big changes in my portfolio for these amounts of yearly variation.

https://investor.vanguard.com/investmen ... bndx#price
https://investor.vanguard.com/investmen ... /bnd#price

[ChapInTokyo]

Well, there is the market condition of course, but of more immediate concern is that the price of BNDX has gone down 3.20% in yen terms since last summer. Since BNDX's annual yield is 4.20% or thereabouts, you'd need balls of steel to hang on to it under current conditions...

You need to expect even more than that level of variation in price for BNDX. Vanguard reports the difference between the 52 week high and low for BNDX as 4.77% for dollar-based investors which is not very much considering that for its larger bond fund BND the 52 week difference was over 7%. On top of that --this difference would sometimes add to and other times subtract from the numbers above-- you have the exchange rate variation between the USD-JPY which was around 10% in 2024. I don't own either of those funds because I don't like bonds but I would not make big changes in my portfolio for these amounts of yearly variation.

https://investor.vanguard.com/investmen ... bndx#price
https://investor.vanguard.com/investmen ... /bnd#price

Thanks for the reality check @TokyoWart.

In my portofolio allocation though, I still have loads of US based bonds and some hedged international bonds so getting rid of Euro Zone heavy BNDX and loading up on JGBs or perhaps more stocks is no big deal for me... I will still be over-weighted international bonds versus domestic bonds.

[ChapInTokyo]

locking in a loss had better be worth it.

Isn't it a bit different with bonds? Because the price reflects the value of the coupon payments. So if interest rates rise, you've already lost. You can choose to sell at a loss, or hold and accept lower dividends than you could get elsewhere.

Disclaimer: I never understand bonds, may be completely wrong.

That is probably how it works. If interest rates rise, then prices of existing bond issues will need to decrease in order for the yield to remain competitive with the newly issued bonds.

Last summer, I bought some Vanguard Total International Bond (BNDX) and some Vanguard Intermediate-Term Treasury ETF (VGIT).

The current yield on my BNDX is 4.22%, whearas the current yield on my VGIT is 3.72%. so not a big difference considering the different duration of bonds each ETF holds.

The price however has fallen by 3.29% for the BNDX since last summer, whereas the price of VGIT has only fallen by 0.19% in dollatr terms.

Since it seems unlikely that the Euro Zone will increase their interest rates this year, it seems to be a bit of a lost cause to me.

[Tsumitate Wrestler]

locking in a loss had better be worth it.

Isn't it a bit different with bonds? Because the price reflects the value of the coupon payments. So if interest rates rise, you've already lost. You can choose to sell at a loss, or hold and accept lower dividends than you could get elsewhere.

Disclaimer: I never understand bonds, may be completely wrong.

That is probably how it works. If interest rates rise, then prices of existing bond issues will need to decrease in order for the yield to remain competitive with the newly issued bonds.

Last summer, I bought some Vanguard Total International Bond (BNDX) and some Vanguard Intermediate-Term Treasury ETF (VGIT).

The current yield on my BNDX is 4.22%, whearas the current yield on my VGIT is 3.72%. so not a big difference considering the different duration of bonds each ETF holds.

The price however has fallen by 3.29% for the BNDX since last summer, whereas the price of VGIT has only fallen by 0.19% in dollatr terms.

Since it seems unlikely that the Euro Zone will increase their interest rates this year, it seems to be a bit of a lost cause to me.

I suppose the really question here is what is your portfolio strategy, and why do you feel you cannot stick to it?

What is your time horizon here? Considering it is BNDX/VGIT I assumed you planned to hold for at least a decade?

You cannot predict currency markets, you cannot predict European central bank timing, you cannot predict Japanese central bank timing.

[captainspoke]

...
I suppose the really question here is what is your portfolio strategy, and why do you feel you cannot stick to it?

What is your time horizon here? Considering it is BNDX/VGIT I assumed you planned to hold for at least a decade?

You cannot predict currency markets, you cannot predict European central bank timing, you cannot predict Japanese central bank timing.

+1

Stop reacting to your news feed, stick with the allocation that you decided on when you retired. Maybe adjust it a little when needed, but this doesn't feel like that.

It sounds like you're making decisions based on the news story of the day, by some supposed analyst/expert who is being quote in a new article. (Which is a great way to stay behind the curve.)

[ChapInTokyo]

Isn't it a bit different with bonds? Because the price reflects the value of the coupon payments. So if interest rates rise, you've already lost. You can choose to sell at a loss, or hold and accept lower dividends than you could get elsewhere.

Disclaimer: I never understand bonds, may be completely wrong.

That is probably how it works. If interest rates rise, then prices of existing bond issues will need to decrease in order for the yield to remain competitive with the newly issued bonds.

Last summer, I bought some Vanguard Total International Bond (BNDX) and some Vanguard Intermediate-Term Treasury ETF (VGIT).

The current yield on my BNDX is 4.22%, whearas the current yield on my VGIT is 3.72%. so not a big difference considering the different duration of bonds each ETF holds.

The price however has fallen by 3.29% for the BNDX since last summer, whereas the price of VGIT has only fallen by 0.19% in dollatr terms.

Since it seems unlikely that the Euro Zone will increase their interest rates this year, it seems to be a bit of a lost cause to me.

I suppose the really question here is what is your portfolio strategy, and why do you feel you cannot stick to it?

What is your time horizon here? Considering it is BNDX/VGIT I assumed you planned to hold for at least a decade?

You cannot predict currency markets, you cannot predict European central bank timing, you cannot predict Japanese central bank timing.

With regard to my BNDX holdings, I bought it last year in Monex but before that I had the same allocation over in Firstrade for yonks, before I started moving my stateside investments over to my NISA, iDeco and tokutei Japanese broker accounts. Before BNDX was launched, I had BWX for my international bonds.

Now, this is something peculiar to my situation, but I am currently quite a bit overweight international bonds and underweight domestic bonds. This is why I think that derisking by letting the US dollar hedged and Euro Zone bond heavy BNDX and increasing my JGB holdings or even JPY time deposits might be a good move.

[Tsumitate Wrestler]

That is probably how it works. If interest rates rise, then prices of existing bond issues will need to decrease in order for the yield to remain competitive with the newly issued bonds.

Last summer, I bought some Vanguard Total International Bond (BNDX) and some Vanguard Intermediate-Term Treasury ETF (VGIT).

The current yield on my BNDX is 4.22%, whearas the current yield on my VGIT is 3.72%. so not a big difference considering the different duration of bonds each ETF holds.

The price however has fallen by 3.29% for the BNDX since last summer, whereas the price of VGIT has only fallen by 0.19% in dollatr terms.

Since it seems unlikely that the Euro Zone will increase their interest rates this year, it seems to be a bit of a lost cause to me.

I suppose the really question here is what is your portfolio strategy, and why do you feel you cannot stick to it?

What is your time horizon here? Considering it is BNDX/VGIT I assumed you planned to hold for at least a decade?

You cannot predict currency markets, you cannot predict European central bank timing, you cannot predict Japanese central bank timing.

With regard to my BNDX holdings, I bought it last year in Monex but before that I had the same allocation over in Firstrade for yonks, before I started moving my stateside investments over to my NISA, iDeco and tokutei Japanese broker accounts. Before BNDX was launched, I had BWX for my international bonds.

Now, this is something peculiar to my situation, but I am currently quite a bit overweight international bonds and underweight domestic bonds. This is why I think that derisking by letting the US dollar hedged and Euro Zone bond heavy BNDX and increasing my JGB holdings or even JPY time deposits might be a good move.

Within your portfolio plan, what is your rebalancing rule?

Do you rebalance annual, quarterly?

Do you do it through buying or selling? Through which accounts?

[ChapInTokyo]

I suppose the really question here is what is your portfolio strategy, and why do you feel you cannot stick to it?

What is your time horizon here? Considering it is BNDX/VGIT I assumed you planned to hold for at least a decade?

You cannot predict currency markets, you cannot predict European central bank timing, you cannot predict Japanese central bank timing.

With regard to my BNDX holdings, I bought it last year in Monex but before that I had the same allocation over in Firstrade for yonks, before I started moving my stateside investments over to my NISA, iDeco and tokutei Japanese broker accounts. Before BNDX was launched, I had BWX for my international bonds.

Now, this is something peculiar to my situation, but I am currently quite a bit overweight international bonds and underweight domestic bonds. This is why I think that derisking by letting the US dollar hedged and Euro Zone bond heavy BNDX and increasing my JGB holdings or even JPY time deposits might be a good move.

Within your portfolio plan, what is your rebalancing rule?

Do you rebalance annual, quarterly?

Do you do it through buying or selling? Through which accounts?

In my accumulation phase, I used to do it annually, at kakutei shinkoku time, although I obviously kept an eye on the allocation when buying more ETFs during the year. I wouldn't say I kept to some sophisticated rule, like a MvD heuristic or anything remotely technical. Just an excel sheet for doing 'what if' simulations. Do you have a special regime for rebalancing that you employ?

As for account, I only had the one Firstrade account until I signed on to Monex, SBI and Rakuten last year. I'm currently using Firstrade, SBI and Monex, and keeping an eye on the overall allocation via Monex Vision. An app I find indispensable, along with the Japan Post Bank's Yuucho Reco freebie OEM of the moneytree app.

[ChapInTokyo]

...
I suppose the really question here is what is your portfolio strategy, and why do you feel you cannot stick to it?

What is your time horizon here? Considering it is BNDX/VGIT I assumed you planned to hold for at least a decade?

You cannot predict currency markets, you cannot predict European central bank timing, you cannot predict Japanese central bank timing.

+1

Stop reacting to your news feed, stick with the allocation that you decided on when you retired. Maybe adjust it a little when needed, but this doesn't feel like that.

It sounds like you're making decisions based on the news story of the day, by some supposed analyst/expert who is being quote in a new article. (Which is a great way to stay behind the curve.)

Thanks for this. Yes reacting to the latest news is definitely a great way to stay behind the curve. I agree.

On the other hand, I think you might be conflating the Boglehead mantra "stay the course" with some kind of rigidity in your chosen asset allocation(s). Surely, you need to stay nimble on your feet, if market conditions change?

[captainspoke]

...

I'll call BS. You don't have an asset allocation grid, and you haven't made your choices. You're just letting yourself be blown around by whatever the wind (the daily news) might be. Good luck with that, esp with this new US administration.

Choose an allocation, and stick with it for a year, or three.

Then re-evaluate and re-allocate. Don't be speculating three times a week on what you might or might not do based on fluff news articles.