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I recently sold some bond ETFs to harvest the capital losses. I want to re-deploy the proceeds into fixed income as my stock allocation is where I want it to be.
I subscribe to Jonathan’s and Adam’s philosophy of taking risk with my stocks, not bonds. I was initially inclined to reinvest in Treasury ETFs, around 75% short term and 25% intermediate term. But with the turmoil reaching even Treasuries over the last couple of days, is a better course to just stash the cash in a MM fund, which is paying north of 4%, at least until things (hopefully) settle down a bit?
I’d appreciate any thoughts.
I have quite a bit in money markets but have been buying municipal bonds on a dip (mostly 5 – 10 year). Everything is going to be volatile so long as policies are not consistent and rapidly changing. This is not a good market to invest in. Therefore mm and medium term municipals. I maintain investments in dividend paying and dividend increasing stocks. You might look at inflation adjusted bonds.
I like to keep my non-equity money spread between money market, T-bills, short and intermediate Treasury ETFs, TIPS and TIPS funds, and I bonds.
Andrew, Vanguard has a Mutual Fund and ETF scanner you can access to narrow your view for further research. Hope it helps.
I’m not enamored of treasury bond ETFs, especially because I can buy bonds at Treasury Direct.
Here’s why:
Vanguards Intermediate Term Treasury Bond fund VGIT is down 16.27% since March 31, 2020. Since 7/31/2022 it has been in the range $62.25 to $56.79. Current price per share is $59.07.
I own two TIPS ETFs. SCHD is down 12.22% since October 2024. VTIP is down 3.82% since December 2020. For both I have reinvested all dividends.
These are examples of why I am not pleased with treasury ETFs.
In 2021 I shifted most of my cash equivalents to purchases at Treasury Direct, to MM accounts and to CDs. As of today my portfolio includes 4.28% bond ETFs/funds. I won’t consider increasing that unless MM and CDs are no longer attractive.
I have two goals for my “cash” equivalents: (1) don’t lose principal and (2) keep up with inflation. Back when cash was “trash” I got riskier and my portfolio allocation was 70/30. I wouldn’t do that today.
I am removing my comment because it is covered in a comment below this which I hadn’t seen.