No. of Recommendations: 3
AGRH is an interest rate hedged total US bonds ETF from BlackRock iShares.
Thinly traded as of now, but I like it enough that it's 40% of my bonds allocation.
Note that it's not hedged to inflation alone (they have AGIH for that). So it should do well if real interest rates go up without inflation going up.
My ironclad motto is that nobody knows what direction interest rates will go next. For example, right now inflation seems to be moderating, but US government that has to be inflated away at some point. So I think it makes sense to have some fixed interest rate bonds, and some floating interest bonds. But the usual floaters are floated by weak and less credit worthy companies. So I like this product much better than FLRN or FLOT or similar, ETFs.
No. of Recommendations: 2
Bonds are something I've rarely owned. When younger it made most sense to put it all into the market or hold a bit in cash when things got lofty. Now that I'm retired I still can't see buying bond funds. Maybe if you think rates are likely to go down then speculating on a LT bond fund I could see.
I'm going more with treasuries, maybe TIPs (still not sure on them), CDs, etc. I know most recommend some kind of 60/40 stocks/bonds split but mine is more 60/40 stocks/treasuries. Might be stupid but unless I convince myself otherwise, that is my likely path except for some money at Fidelity in the Puritan fund (sort of a balanced fund).
Good luck
Rich
No. of Recommendations: 2
Maybe if you think rates are likely to go down then speculating on a LT bond fund I could see.
I'm going more with treasuries, maybe TIPs (still not sure on them), CDs, etc.
There is a misconception in your post. AGRH is pretty much the shortest duration fund you will find. BlackRock has made fixed for floating swaps on the underlying ETF that is AGG, which is the US aggregate bonds.
As far as safety goes, I agree US treasuries are safer and you can buy the equivalent treasury floating rate ETF TFLO, also with extremely short duration. And of course, a lower interest rate.
AGRH does trade by appointment as they say. Low daily average volume ~ 1500 shares per day.
Nonetheless, for people who are comfortable buying the US aggregate bond market, but do not want to bet on the direction of interest rates, AGRH is a good solution. If rates go up, you get more income, if rates go down, you get less. But your principal is much better protected than a long duration bond ETF like AGG.
