EDV

pigglesthepup

Consumer staples are always good as defensive stocks. But they're still equities. When equities crash, consumer staples will take a hit. They just rebound faster than the rest of the market. The better recession hedges are Treasuries: VTIP/STIP: short-term TIPS. Good for inflationary shocks -- like right now. SPTI/VGIT: intermediate Treasuries. Neutral ballast. SPTL/VGLT/TLT/EDV: deflationary shock absorbers. 2008 + 2020 style crisis hedges.

Mission_Adagio4566

Is there a good (available in the US) global long term bond fund? Something like EDV or ZROZ but global.

yatruthordare

yep- time to buy EDV/ZROZ

yatruthordare

calls on EDV

yingtan

why u use 33% $EDV for hedge?

MrMathamagician

Honestly the quantity of roasting you’re getting makes me more inclined to take your position. I think the dot com bubble is useful to look at but there is also another bubble worth comparing against as well. During the 70s stagflation era they had 50 stocks called the ‘nifty 50’. These were well regarded stocks with growing revenues that could outpace the inflation of the era. Everyone bought these stocks and bid the price up to insane multiples. Ultimately it was a valuation bubble that crashed hard. The underlying companies continued on just fine though similar to how Amazon stock price crashed 95% in the .com but obviously came back with a vengeance eventually. I am concerned about lingering last mile inflation as well as stagflation in the current economy so I think studying this bubble is informative especially comparing valuations of the magnificent 7 to the nifty 50. In the 70s the correct move was to go into long duration high interest bonds and I have begun buying some EDV (basically a long dated 0 coupon treasury bond with magnified impact of interest rate changes). I will be keeping a close eye on consumer spending, sentiment and jobless claims. The idea is when a recession hits and the Fed has to lower interest rates more quickly EDV will gain more value than bonds.

tech01x

yeah, but note they also have been making their EDV van.

HL3HopiumOverdose

Basically, they have some money, right? And instead of just using that money to invest, they are borrowing money (leverage) to use that in combination with their own money to invest in a diversified portfolio of stocks, specifically ETF's and mutual funds. An ETF is a collection of investments like stocks or bonds. A mutual fund is when a group of investors pool money together and a fund manager takes care of it. The manager either buys a lot of diversified stocks (actively managed) or the fund just mirrors an index like the S&P 500 (passively managed). Every person owns a tiny piece of the money in the pile. Using leverage is a double-edged sword because if the market goes up, the money pile grows fast. If the market goes down, it shrinks fast. The measure of how amplified that difference is, is called volatility. High volatility means stocks shrink or grow fast, low volatility means its much more moderated. A leveraged position becomes more volatile because the more money you put in a stock, the more of your own money is put at risk. Let's say you put $10k on an ETF like QQQ (tech), half of your money being leveraged (borrowed money). That is 2x leverage. This means if the market dips 10%, the amount you lose is 2x that because your equity (the money you truly own, subtracting what you owe) absorbs that impact instead of the money you borrowed. So instead of you losing $500 on your equity, you lose $1k. When you leverage money, the broker you leverage money from will require a maintenance margin, which means your equity must always be at a certain percentage of total assets. If you go below this percentage, the broker will issue a margin call which forces you to deposit cash to meet the minimum or sell assets to reduce the loan. If you cannot do this, the broker sells your investments automatically. When you have a leveraged position, every loss you take is felt by your equity, which means you are much more likely to be issued margin calls. The equity itself is put at risk which means you're basically gambling your money for a stock position to go up when your leverage is as high as 3.2x (the leverage we're seeing in the post), even if the portfolio is diversified. EDV is interest-rate sensitive which means that the value of EDV becomes volatile when interest rates change. This is dependent on if the Fed (the federal reserve) fears economic recession or inflation. If they fear economic recession, they cut the interest rates, which offsets losses and allows some breathing room if there's a sharp economic downturn. But if they fear inflation, they raise rates, which amplify losses. Since EDV holds long-term bonds (25-30 years), they are really sensitive to interest rate changes, because the interest rates and bond prices move in opposite directions. The duration of bonds has a big effect on how volatile it is. EDV is a good investment when inflation and interest rates by extent is stable, but a horrible one when it's not. VFMF is designed to reduce swings by holding less volatile stocks. It's still doesn't eliminate risk because it can still face market-wide crashes. With a 3.2x leveraged position, this reduction in risk is mostly negated. VTIAX is an international stock fund, which means its exposed to foreign economies, currencies, and political risks. This means any exchange rate swing can amplify your gains or losses. This is less correlated with U.S. stocks, but it can still drastically fall in global recessions. VOO tracks large-cap American companies. It's pretty ordinary. VTI and VTSAX covers all American stocks, from small-cap to large-cap companies. Small- and mid-cap stocks are more volatile, and market swings impact VTI and VTSAX broadly. You can see that their portfolio reacts heavily to economic and political events. With 3.2x leverage, if some sanction results in a 5% total market crash, his equity (which is $5M) is reduced by 16% which is a staggering $800k loss. That's only 5%, and if they face a margin call, losses are much worse. This is why this strategy is precisely horrible.

LifeIsARollerCoaster

Can you please explain why you have 2.5M in EDV. Am I misunderstanding or is it just bonds? The 30 day sec yield is 4.9%. I am assuming your margin rate must be lower than that. Regular margin rates are over 5%. I don’t get how you are getting it at lower rate or how you make profit on this if half is borrowed on margin

long_short_alpha

She is using 3.2x to 4x leverage. Around 2.4 million is in the EDV. The rest ist still a 2.2x to 3x leveraged mostly stock portfolio, so i think a leveraged 2x S&P500 isnt a bad comparison and she should be able to beat it with an even higher leverage.

Dry-Drink

*"I can only interpret the information you are giving us"* I've documented my portfolio since I started, you can check my post history. In 2020-2024, bonds had yields near the 3-month T-Bills. So my advisor had me stay away from EDV. Why invest if there's no premium? By 2025, there was a hefty premium, so worth including. *"EDV will give you roundabout US Treasury yields as returns over a longer period of time. Your cost of borrowing should be higher than the very low risk treasury yields over a longer period of time. Thats just how credit markets work."* I borrow at the short-term 3-month rate with the box spreads. EDV provides the (higher) long-term rate of STRIPS. There's your term premium. *"but you pay for it with negative yield if leveraged."* Sir, what is the yield on EDV right now (4.9%)? What is my borrowing rate (4.0%)? Which number is bigger? *"Thats just how credit markets work."* My borrowing rate is the inherent short-term risk-free rate of derivatives. They have to be due to arbitrage. In practice it's not quite so low but it's around 0.2-0.3% higher than the 3M T-Bill. My last box filled at 4.0% borrowing rate. And that's tax-deductible as a capital loss.

long_short_alpha

I can only interpret the information you are giving us. Since you said you have invested since 2020 in a diversified multi asset portfolio, you then probably had a different low risk bond part included before. So i stay at my statement from above, that this doesnt make sense to me with that kind of leverage. EDV will give you roundabout US Treasury yields as returns over a longer period of time. Your cost of borrowing should be higher than the very low risk treasury yields over a longer period of time. Thats just how credit markets work. So yes, it may give you a little negative correlation, and your risk statistics look a little better, but you pay for it with negative yield if leveraged. So over a longer period of time you will pay more over the years than it will help you in the market crash. But anyway, all the best for your future Investments, just speaking what comes to my mind when i read your post. What you do with this is up to you.

Dry-Drink

*"in a way you used 2.4 million of your leverage to buy US Treasuries. I dont think this has created a positive impact in any year for you"* I bought it 6 months ago and it's up $70K just on appreciation. To that, you'll have to add the 5%+ interest payment. It's not quite as good as stocks but it's still positive net my borrowing rate. *"I guess your overall risk in absolut dollars wouldnt be really higher if you would reduce your leverage to 3.5 million and exclude EDV. And your performance would have been way better."* EDV has a slightly negative correlation to stocks. So my risk would be higher if I sold EDV and paid back the $2.4M. And the returns would be lower because EDV has beaten my borrowing cost.

long_short_alpha

The last paragraph is just nonsense. Diversification is of course important, but an US index fund is already quite diversified. The comparison of your portfolio with a bank would be: is a european bank better of loaning to all reagions of Europe, or does it need to use extra leverage to loan to south east asia too? Let me ask you a question: in a way you used 2.4 million of your leverage to buy US Treasuries. I dont think this has created a positive impact in any year for you. It just lets you feel safer, because your risk figures in relativ terms look better. I get that in a stock market crash with big rate cuts it could gain some money, but it just doesnt really make sense to buy it on such a leverage, because your losses in a real market crash would be way higher. The EDV wont safe you. I guess your overall risk in absolut dollars wouldnt be really higher if you would reduce your leverage to 3.5 million and exclude EDV. And your performance would have been way better. But thats just my thoughts when looking at your portfolio for 5 min. What do you think about that?

Dry-Drink

They have a commodity fund, it doesn't show on the list? Leverage from options is with box spreads. My advisor has used futures in the past too. It's like Hedgefundie's but more diversified (HF was only S&P500 and treasuries, mine has alternative assets like commodities, some long-short funds and a far more diversified stock sleeve), lower fees (my advisor charges a fraction of what ProShares and Direxion charge in the ETFs) and far more tax advantaged (HF if you recall, said only in retirement accounts precisely because it was so tax inefficient. Mine is in taxable). In 2022-2023, I was not zeroed out because I had little treasury exposure. While the dorks at BHs were feasting on 1% 30Y bonds, my advisor told me to stay away because his optimizer didn't allocate to it. Two years later, long-term bonds are finally attractive and he has me dump $2.4M into EDV, which is in the positive (see positions in OP). Meanwhile, HF acolytes all in ruins. Ratios change based on what my advisor says. The rebalancing I'm sure is just based on bands, keeping taxes in mind of course. He can probably explain it better than me.

Dry-Drink

*"VOO and VTI has so much overlap I dont even know why you're doing that to begin with"* Tax loss harvesting. *"about "boomer index funds" while leveraging yourself into EDV, VTI and VOO?"* What boomer invests in EDV? Also, some of the positions I black out because my advisor asked me to. Those are more alternative assets and that's most of my investment. And as for the actual Vanguard funds, hey buddy, I don't like it any more than you but my advisor says I gotta take some medicine so I accepted some in them. *"but im not sure what you're bragging about?"* Half of this thread are people telling me I'm certifiable insane, and then other half tell me what I'm doing is not that big of a deal \*shrugs\*.

sciguyx

let me get this straight. you are talking shit about "boomer index funds" while leveraging yourself into EDV, VTI and VOO? VOO and VTI has so much overlap I dont even know why you're doing that to begin with. second, I applaud you for being "safe" and using those ETF's but im not sure what you're bragging about?

rndname

> EDV I googled it.. but can you clarify why EDV? -87.48 (-56.42%) past 5 years

Dry-Drink

I used to have treasury futures too. My advisor switches between them and EDV, depending on the situation.

quarkral

Why don't you use treasury futures instead of buying EDV on margin?

Complex-Note-5274

good. I sold ccs on EDV may they expire worthless

Jon3141592653589

I agree 100% on SPX - I only use it for options and speculative hedging. My favorite high-risk position is a rolling call position on TLT and EDV. A repeat of 2008 and the sale of TLT calls will let me exercise enough EDV to take on a 50% position; a repeat of 2020 and I'll probably retire.

pigglesthepup

>how they perform during major, negative market events Chart EDV (extended duration treasuries) against the SP500 in 2008. That's your answer.

pigglesthepup

You want a **short-term** treasury fund. >TIP (iShares TIPS Bond ETF) Crashed hard in 2008 because CPI cratered and Lehman was the largest holder of TIPS at the time and dumped them all to raise cash. Also took a beating in 2022 from the rate hikes because intermediate duration (6 years). Both of these things are visible on TIP's full chart (why do people not look at charts?). A **short-term** TIPS fund like VTIP/STIP will have less volatility. VTIP/STIP returns have been better than BSV (nominal treasuries + investment grade corporates) in recent years because higher inflation. >AGG (iShares Core US Aggregate Bond ETF) Not short-term. Treasury holdings will keep it stable tho. Longer duration treasury funds have "crisis alpha" -- they *rise* in value during deflationary shocks. See the performance of TLT or EDV during 2008, Covid, or even this past April for an example. But they are not short-term. Only put in money you don't need for a long time.

Complex-Note-5274

AGNC. I have some EDV too. My stagflation hedge been eating shit tho

tachyonvelocity

1) Safety and 2) Duration exposure Bonds are safe because they are basically guaranteed income over a duration. This makes sense when you can't tolerate falling net worths, which results in falling spending. Bonds have high "duration risk exposure," due to them being fixed rate investments. This means a change in a new interest rate regime either reduces or increases past fixed rate bonds because the new rate is higher/more attractive/makes past bonds worth less or lower/less attractive/makes past bonds worth more. Think about compounding. A 1 year bond compounded 4% is just 1.04x. A 30 year compounded 4% is 1.04\^30, or 3.24x. If a new interest rate is 3%, a 1 year bond becomes 1.03x. A 30 year bond is now 1.03\^30, or 2.43x. Look at the difference in value for a 1% reduction between durations. If you held 4% bonds then interest rates change to 3%, your 1-year 4% bond is more attractive and worth about 1% more than the new 1-year 3%. Your 30-year 4% bond is way more attractive and worth 3.24/2.34 or 33% more than the new 30-year 3%. Taking on "duration risk" the increasing change in value for increasing duration, is also a benefit if you think bond yields fall. Now think about WHY bond rates fall. Bonds rates are priced by the market based on a combination of expected inflation and growth over the duration. So if you think growth or inflation or both falls in the future, then a decrease in rates leads to extremely high gains. Conveniently, both growth and inflation falls when there is an economic recession, making buying bonds anti-fragile, they increase in value while stocks decrease, reducing overall volatility, and giving you downside protection. This can obviously be beneficial because you can use your positive liquidity to buy cheaper assets, like stocks that have gone down, when others are selling. Let's take a real life example, EDV, an extended duration bond ETF. It boomed in value in 2008, over +66% while stocks were crashing. Over the next decade of zero rate regime, EDV gained in value at negative correlations with SPY, acting like a hedge, then boomed again during the pandemic. Over 13 years from 2008, extended duration bonds massively outperformed the S&P500 (250% vs 140%). Of course, bonds also became too expensive, and interest rates too low. But conveniently, long duration bond yields are as high as 2008 again, making bonds cheap. This was due to high post-pandemic growth and inflation,

RustySpoonyBard

Buy EDV for real convexity.

Efficient_Pear_6584

I'm expecting gold to take a breather while ETFs like EDV/TLT to see price appreciation!

RustySpoonyBard

Long bonds as a counter cyclical. If stocks fall due to AI hype then long bond yields will plummet.  EDV is ideal.

Sapere_aude75

I suppose the best way to capitalize on that outcome would be call options on something like EDV. It's a very high risk play though

Rg8989

I actually have ZERO experience trading bonds. My thought process is, liquidity is drying up right now (looking at reverse repo), which is coinciding with regional banks selling off. Fed (IMO) will be more aggressive to prevent another SVB like scenario from '23. QE will follow. You already see gold and silver pricing this in. This is happening as global economy is slowing, due to where we are in the cycle, and exacerbated by tariffs. This will lead global funds into US bonds. As demand surges for US Bonds. This is why I am bullish bonds. The gains you highlight is very impressive. I'm looking at TLT, I have a PT of at least the highs during covid. June '26 105 calls are looking very tempting to me. I'll compare the deltas for EDV at similar strikes to see where theres more opportunity.

jtmn

EDV rose 70% between April 2019 and March 2020 \+87% from Dec 2018 to March 2020 \+60% between 2013-2014... \+30% Oct 2023 to Dec 2023 \+20% between March 2021 and Dec 2021... \+60% July 2011 to Sept 2011 \+60$ Nov 08 to Dec 08 etc. Sorry, but what are you talking about?

jtmn

People in this sub don't realise that EDV rose 70% between April 2019 and April 2020, or 60% between 2013-2014.... or 20% between March 2021 and Dec 2021... They probably have extremely limited understanding on how bonds work.

thethirstypretzel

Alright here’s my best guess: we stay flat from now to mid Nov. around Nov 20 or so the market will TANK down 10%, adjust back up 3% the next day and then bloodbath over Thanksgiving week. We won’t hit the bottom for at least 1 year. I’m waiting for cheap calls on EDV closer to that week. The fact they’re letting us put out 401k in private credit is fucked and is the writing on the wall. In the long run, private equity and credit will blame big tech, and vice versa. Ban me if wrong.

Acceptable-Pea2160

Long duration US treasury ETFs - highest duration products (extended duration 25+ year) like EDV, ZROZ returned ~2.5%

A_Whole_Costco_Pizza

Bonds (especially long-term treasury bonds, which are especially sensitive to interest rate changes) are at long-time lows, and yields are at a 44-year high. EDV, Vanguard's long-term STRIP fund, is paying over a 5% yield right now, and is at its lowest point since the fund's inception in 2007.

Fun-Sundae4060

ZROZ is like a leveraged version of TLT, gives noncorrelation or negative correlation to equities with slightly positive expected return. I actually use EDV for even more negative correlation but for backtesting purposes ZROZ has a longer time period availability. KMLM is much the same, diversification against equity, gold, and treasury bonds exposure with positive expected returns in the long run.

pigglesthepup

No one really knows. However, this is what has been communicated by the current administration. Trump wants rates down and I believe Bessent specifically said they're targeting the 10-year. Since the Fed Rate is only the short-term rate (T-Bills), there might eventually be some QE action to get rates down on the longer end of the curve. Basically all of Trump's moves regarding the economy is to get rates down. The presented-on-posterboard Liberation Day tariffs were put on "pause" because bonds did not sustain a rally and rates instead rose. I'm pretty sure this next week's government shutdown will be the same sort of deal: if rates rise again instead of fall, I expect the GOP to postpone a shutdown for a later date. Anyway, everyone in govt including Trump seem to blink when long rates go above 5%. EDV right now is still yielding just under 5%, so if rates rise a bit, you won't be hurt too bad. TLDR: Trump wants yields down but the market as of yet hasn't been very cooperative. Maybe EDV will pop, maybe not. I have 10% of my Roth (and only my Roth) in EDV regardless.

Sudden-Ad-1217

Not EDV or ZROZ? Amateur.....

RustySpoonyBard

They calculate inflation by asking boomers what they would rent their house for, the CPI is crafted to never be stagflation ever again, buy EDV.

RustySpoonyBard

EDV.

Wan_Haole_Faka

Ha, well I haven't fully either, just know enough to get by. Basically, there are so many types of portfolio designs. For instance, retirees and Ivy league endowment funds may invest similarly. The point is to hold assets that have low correlation to each other. You can run the asset correlation analyzer on [portfoliovisualizer.com](http://portfoliovisualizer.com), basically just plugging in different funds to see the effect. This approach of investing basically takes advantage of the Shannon's demon effect of volatility harvesting. It's not as profitable long-term as 100% equities, but it's designed so something's always up while others are down. Things like AVUS, DFAX, GLDM, EDV, DBMF, etc.

No-Let-6057

Bonds aren’t super high! EDV and GOVT are below their highs from five years ago. 

Fun-Sundae4060

My personal allocation is - TQQQ 55% - UGL (gold 2x) 15% - EDV (bonds) 15% - CTA/KMLM (managed futures) 15% TQQQ, gold, managed futures, bonds strategy with 200SMA switch Results with dotcom bubble and 2008 GFC: Strategy: https://testfol.io/tactical?s=93v4T1s6yXo Standard ETFs: https://testfol.io/?s=9giBG7lgiNi

Fun-Sundae4060

TQQQ and QLD UPRO and SSO ZROZ, EDV GLD and lower ER variants CTA, KMLM, and DBMF

Nemarus_Investor

Are you me? Sitting here with TLT and EDV covered calls too lol.

Days_End

Honestly it seems like rates aren't going to come down that much all things considered so you need to go very very long term for any real gains. Stuff like EDV or ZROZ

Aggressive-Donkey-10

[https://www.conference-board.org/images/pubs\_covers/meta/DefineRecession1200%C3%97627.png](https://www.conference-board.org/images/pubs_covers/meta/DefineRecession1200%C3%97627.png) most large downturns accompany recessions like 2208/2001/1991/1981/etc in interesting fund would be EDV, which holds 30 yr US Treasury strips, in every recession, the long bond yields usually initially fall, for 2 reasons 1) flight to safety drives up price/down yields and 2) any Bond is ultimately a referendum on inflation risk and if GDP slows then yields down too. So when 30yr falls 1% then EDV goes up 30% in price, down 2% up 60%, so can be a Hedge, and it pays 5% while you wait, but the risk is if yields rise you lose 30% : 1% rise.

BlightedErgot32

shoulds done EDV instead of TLT.

Aggressive-Donkey-10

in 2022 when QQQ fell 35%, BTC fell 75%? not a safe haven nor inflation hedge, just a risk on NASDAQ type investment If you want something to hold value in either Stagflation or Recession, then consider GDMN, it holds gold bullion and many gold miners and pays a 5.5% dividend, up 100% last 1 year, or also some EDV - holds 30 year US treasuries In the last recession 10/07 until 3/9/09, VGT fell about 51%, gold held steady, EDV up 60%

IronyElSupremo

Zero-coupon bond funds/ETFs get hit worse when rates rise as there’s no real interest payment to cushion the blow. The interest rate and price relationship for bonds is known as rising rates mean a new investor can buy a new bond yielding more, so for bond funds that impacts the NAV. However for regular bond funds, investors are also getting a higher rate for income or wanting to reinvest to use the bond fund as a basic hedge against an inevitable recessionary stock market crash .. i.e. the plan is to be able to cash in those bond shares at a profit anyways. With zero coupon etfs like EDV, the latter relationship is on steroids as there’s actual reinvestment via “phantom interest”. So since the ‘90s I’ve held some zero-coupon ETFs (now iShares GOVZ) in a tax deferred account accumulating shares as “insurance” against a recession .. and have used them before (2008).

HolaMolaBola

The formula is *bondDuration x expectedChangeInYield = expectedPercentChangeInPrice* The idea isn't just to have a bond allocation, but a potent bond allocation. One that swells in size in when there's a big flight to the safety of bonds. Your choice of Treasury is good because it's the bond-type most guaranteed to zig when stocks zag. Treasurys of all maturities benefit in a flight to safety but the most impact is felt in the longer maturities. Would you like a 10% bond stake that balloons to 15% in a big stock selloff? Where you can then sell the bonds to raise cash to buy more stocks on the cheap? You can science that outcome. To turn a 10% bond stake into a 15% bond stake requires a 50% price increase (*expectedPercentChangeInPrice*). Now, make a guess as to how far yields might drop in response to a stock crisis. The 30yr bond yield is currently 4.96% and we can imagine it falling to 2.00%. So a 2.96% drop (*expectedChangeInYield* ). Finally then, solve for bond duration and that tells you what kind of Treasury fund to buy. *bondDuration* = 50% / 2.96% *bondDuration* = 16.89 years At this point one option is to get something close to a 20year Treasury. That satisfies the duration requirement, but it isn't diversified. This 2.96% drop in yields that we're expecting may not happen evenly across all maturities. So, alternatively, VGLT has a 14.15 year duration using a mix of 10-20 year maturities. Since VGLT doesn't provide enough duration all by itself, blend it with a little of: EDV has a 24.04 year duration using a mix of 20+ year STRIPS Good luck! With this info you should be able to tailor something you're happy with.

Eascen

EDV it's a great hedge.

AICHEngineer

Its really hard to say, because inflationary risk is the bond killer (thus the 2022 bond bear market). As rates got lower and lower through the 2010s and then post pandemic, wallstreet was desperate for higher yield fixed income products and loaded up on US government debt at longer maturities to beat the risk free rate. Lo and behold, fiscal policy from covid stimulus where we literally dropped money from helicopters into peoples laps plus supply shocks from the lockdown led to inflation, thus monetary policy tightened. Now, long bonds yielding much lower than the risk free rate had to be severely discounted since you could get a risk free 5.25-5.5% at peak rates in 2024. Without trumps tarrifs, bonds would be looking alot happier right now. The big beautiful bill is a huge looming risk to bonds, as inflation from bad fiscal policy would tarnish the trust in US debt, raising rates and lowering par value of bonds. If inflation doesnt come back, you get a really good deal with these rates. If debt hawks in the senate mediate the deficit, bonds look better. Its hard to say of stuff like TLT or GOVZ or ZROZ or EDV will be good in the near or mid or long term, but there is this spectre of recently being burned on long duration debt thats made walk street and the world less likely to hold super long bonds. That means lower demand and higher yields, but should that faith slowly come back, then there will be upward pressure on bond prices and yields would lower.

helpwithsong2024

Change UPRO to VOO and you got it. How old are you? 40% EDV seems very conservative.

Mission_Adagio4566

At heart I'm a boglehead who wants to set and forget, but also generally believe a bit of leverage can go a long way. 20% UPRO, 40% VXUS, 40% EDV

Mission_Adagio4566

At heart I'm a boglehead who wants to set and forget, but I generally believe a bit of leverage can go a long ways. Does a 20% UPRO, 40% VXUS, 40% EDV portfolio sound insane?

150mmm

$2 million in EDV 😂😅 god only knows the other positions you’re margining

neutral_good-

I haven't seen anyone really answer how BND works for your portfolio.. all of those "Bond etfs" just pay a monthly dividend. BND yearly dividend is around 4% so you get 12 payments a year that will equal a roughly 4% return on your investment. If you look at long vs short bond etfs, you will see how rate changes affect their prices. EDV for example - vanguard long term bond - the price REALLY changes with rate changes. Back in 2021 it was $177 a share, now it is in the $60s. If rates go up, price goes down. That's because all ETF dividend payments are a constant, so if rates for the underlying bonds in EDV go from 2% to 4% for example, and the dividend payment is $2 a year, then the price will move accordingly with the rate change. In this example when rates are 2%, the price of EDV would be $100 a share (so the $2 yearly dividend is 2% of the price). When rates go up to 4%, the price would drop to $50/share so that the $2 in yearly dividend is now 4% of the share price. Short term bond ets dont move much in price, take VUSB (vanguard ultra short bond) as an example. The price since 2021 has moved between $49-$50 and rates have been around 4% the whole time, as you'd expect for short term bonds. I personally am holding a large amount of VUSB right now for the 4% return.

Dry-Drink

Those are tiny percentages, do you really expect a 5% International positions in stocks to have a material effect? Either make it zero to simplify, or go to the full market global weight (40%). The 15% in EDV, meh, maybe. I suspect you're not leveraged, in which case, I guess it's an option. I have more than 100% exposure ($2.4M in EDV in my $2.1M account), at that point, it begins to have a real strong effect.

spilledonwhite

Totally agree, I just went in 10-15% with 50-50 VGLT/EDV about a month ago in retirement accounts. I only have 1 months expenses emergency fund and consider it a last line of defence until I can get the cash savings up. 10% didn't seem to hurt portfolio sharpe very much over the long term. Since you are on leverage it seems like a good play as well. It took a lot to get me to do 5% across SCHF/SCHY and now I'm starting to wonder if I should have done more. My whole adult life international has been dogshit.

Dry-Drink

Because it's a great diversifier to stocks AND the interest rate on long-term treasuries looks really good atm. It took a 63% bear market for EDV to finally become attractive instead of the overvalued junk it was 4 years ago, but now it's finally its time to shine.

spilledonwhite

Why so heavy on EDV?

Dry-Drink

Well EDV is down like 63% since its 2020 highs. Stocks are not quite as risky but they still are risky. I wouldn't call them "safe" but they're definitely safer than 0DTE options on a single stock.

AICHEngineer

If the purpose is to diversify against drops in equities, then you should be going longer duration. A fund like EDV would be where you go to for this.

HolaMolaBola

I'm in post-retirement and instead of a CD that won't lose value I'd rather have a bond stake that could balloon in price in a meaningful way during a stock selloff—because tamping down volatility becomes important when you start pulling $$$ out of the portfolio for living expenses. Nobody likes a year when stocks finish negatively, and that pain worsens when you're also pulling, say, 3-4% out of the portfolio annually to pay for living expenses. Anyone owning bonds or bond funds should get familiar with this formula that uses Duration (which is similar to, and usually a bit shorter than the bond or bond fund's stated Maturity.) *Duration* x *ExpectedChangeInYield* = *ExpectedPercentChangeInPrice* So in an imagined huge stock selloff there's for sure an initial flight to safe Treasurys and possibly following by the market thinking that the Fed will step in to lower rates. Such a situation could easily see the market causing a 2% decline in Treasury yields across all maturities. Here then is the price-appreciation you could expect to see in your bond or bond fund. 3-month Tbill 0.25years x 2% = +0.50% 1-year TBill 1year x 2% = +2.00% 2-year note 2years x 2% = +4.00% 5-year note 5years x 2% = +10.00% Vanguard's EDV fund that uses 20+ year Treasury STRIPs 24years x 2% = +48.00% As you can see there can be big payoffs in the longer maturities, which in normal times makes long term Treasurys a really good hedge for stocks. But longer maturities have a cloud over them right now bc of possibly higher inflation and definitely larger govt deficit spending. Me personally? My overall aggregate duration is 4 years, composed of mostly 3yr debt with a smattering of 6yr maturities. Hope you find this helpful. Good luck!

Wan_Haole_Faka

Thanks. Are US treasuries still considered investment grade? I know MCO changed US sovereign debt creditworthiness, but I don't know all the grades off hand. I like VGLT because it's cheaper than TLT. I guess that would be considered medium-long bonds. I was looking at EDV but I also know it has way bigger interest rate risk, not necessarily a bad thing. I think I just need someone to sell it to me. I know longer duration has lower equity correlation. I do hold some BNDX in my taxable but generally shy away from corporate bonds due to the higher correlation with stocks. That's why I also like gold and managed futures.

fledgling66

I started taking nibbles of EDV when it got into the $62 range. No idea what to expect.

Tendie_Tube

You may be right in the long run, but it sounds to me like OP is considering one-week puts. Seems like a good way to get toasted. If you wanted to play the thesis that the US will have a Liz Truss moment, maybe play bearish on TLT, EDV, or ZROZ. That way it is possible to be right for unanticipated reasons, like a comment from JPow, and to avoid some ways of being wrong for unanticipated reasons, like good corporate earnings. SPY is probably starting a new bull market, and is only indirectly related to the thesis. Long-term bonds are directly related to the thesis.

therealjerseytom

I've got a modest position of TLT that I scooped up at a good price. Might do more, or EDV, come end of June when I have a CD reaching maturity.

YesterdayAmbitious49

All the way out, I like trading $EDV personally, just as a swing trade. This is swing trade #4 lol. My broker lets me lever up a bit if I want to. This morning was too good to pass up. Nothing as exciting as your options trades, but I’m happy with single digit percentage gains and I’m out. Last week I posted here when I closed out on Friday with a 2.17% gain. Today I’m looking at about a 4% gain after buying in at the low with 50% leverage. I’ll close it out soon.

therealjerseytom

> Is it a no brainer to buy these? [...] Is it relatively safe to buy these? The longer the duration of a bond, the higher the interest rate sensitivity. If you buy in a bunch of TLT or EDV or whatever, if interest rates climb even higher, your principal value will go down. Same thing as your MUB position having dropped, but even more sensitive. The other side of this is if and when rates are cut, the principal value will go up. I have some TLT scooped up for that purpose. Hard to know where rates will go from here, and on what time frame.

YesterdayAmbitious49

Well, I entered another swing trade on $EDV. 2300 shares at 63.50 at the open. Let’s see if I get burned on this one. Last week I made out with a 2.17% profit on this trade.

AICHEngineer

Etfs, yes. TLT, EDV, GOVZ, ZROZ. Risk? ZROZ since 1962 has a volatility of 24% vs SPY with 16%. Long duration debt is super volatile and super sensitive to macro conditions. Max drawdown of -80% (before inflation) after the 70s great inflation, -60% drawdown from pandemic supply shock inflation.

therealjerseytom

I'd just go with TLT or EDV. I have a small portion.

YesterdayAmbitious49

Swing trade on extended duration treasuries looking tempting again. Might wade in this morning. Looks like we will open with a blast downwards through the 20 year lows on $EDV.

YesterdayAmbitious49

Well, there it is. Not as fancy as any of you hotshots, but I completed my small swing trade in $EDV. I bought on Wednesday at an entry price of 64.40 w/2300 shares. I closed my position this morning this morning at 9:05AM at 65.80 for a 2 day price gain of 2.17% and a profit of $3,220.

YesterdayAmbitious49

Well boys, I entered my third go-around with a swing trade on long term bonds. The first 2 swings were a resounding success. Do you think third time is a charm or will I be torched? My position is 2300 shares of $EDV, bought just now @ 64.47

apocalypsedg

They use LEAPs on like 7 year bonds, so the theta decay is almost negligible. You get the better yield at the middle of the yield curve, and it's long volatility. The design of it gives great convexity, and you get longer duration (more capital efficient) exposure than say EDV/ZROZ/GOVZ without sufferjng from volatility decay like with TMF or TYD.

YesterdayAmbitious49

Well, I closed out my swing trade on $EDV for a tidy 4% profit. Yeah, it’s small but it’s better than nothing.

YesterdayAmbitious49

Had you taken a nibble on $EDV with me at 64.50 you’d be up bigly

YesterdayAmbitious49

Yeah, I took a tiny nibble on $EDV yesterday at 64.50

YesterdayAmbitious49

I’m nibbling (small nibble) on some $EDV this afternoon Last time bought at these levels was in October of ‘23 and the swing trade turned out pretty good

gpg2556

Quick analysis points to long duration treasuries (TLT, EDV), corporate bond etfs (LQD VCIT) or gold etfs

VeryStableGenius

> If you go back in time 1 week, you see people cashing out their bonds at a profit while the stock market was shitting the bed. So.....yes you do. I'm still lost. If I go back in time 1 week (Apr 5 or so), long term rates weren't much different. Here's a graph of [30 year bond data](https://fred.stlouisfed.org/graph/?g=1I5AD). The dip a week ago was pretty minimal. Profit taking would have been better on 2024/12. The profit taking window was minimal, and it's a profit only if they purchased ideally compared to past year. But you said they were holding bonds for years, so the tiny dip a week ago was not some grand profit taking opportunity. > then yes, selling off your bonds and stepping away from what was once a highly predictable asset class to hedge against losses in the stock market I believe that people might be dumping bonds after taking losses in equities, sure. My beef is with your initial claim that "as the bonds have gained in value, and it makes sense to sell off the assets that are higher priced" - this gain in value was small, and the sell window was very short - in fact, rather little volume of bonds could have been dumped in that tiny window without driving yields up again, and bonds down. > And these shifts weren't caused by people holding an index fund of bonds. Of course the big boys aren't clicking sell in their Vanguard account. My point was that the EDV fund is a convenient way of tracking the price of bundle of long term bond, without resorting to the actual bond equation. FRED can't plot fancy equations, so I have no way of translating yields to prices without creating a spreadsheet of yields, typing in the bond equation, converting yields to prices, making a plot, and posting on imgur. Much easier to post a link to EDV to make my point.

VeryStableGenius

> You don't understand because you're only visualizing the yield side of the bond equation, there's a price side of the equation too. I know. I know. That's my whole durn tootin' point. You make money when you buy bonds when rates are high and sell them when rates are low. But now rates are high, so if you sell any bonds you've purchased in the past 20 years you lose money, or, at best, break even. The only time you could have done buy-at-high-rates plus sell-at-low-rates is if you had bought before covid, and sold during covid, when the Fed tanked rates to negative. Look at the price curve of [EDV](https://finance.yahoo.com/quote/EDV/), Vanguard's long duration bond fund. The only good money making oppurtunitie were selling around 7/2020, or maybe a little bump buying in 10/2023 for 66 and selling in 1/24 for 80. Now EDV is back at 66. Bonds will go up again if the Fed re-starts QE. Otherwise, they're money losers. I don't see anyone cashing out of long term bonds at a profit.

BlueSwoosh248

Idk what to do with my EDV position. Feels like it is going to get fucked

BlueSwoosh248

Hope I can get out of EDV before it gets crushed.

NoPomegranate451

The sell off in US long bond proxies like TLT/EDV has my attention. Stocks one thing, if the world refuses to lend us money on the cheap 4D chess will quickly turn into Jenga.

Fun-Sundae4060

I would recommend VOO and 2 hedges. Perhaps 80% VOO, 10% IAUM, and 10% EDV will do you good.

Previous_Section_679

My TLT bonds and EDV are bleeding portfolio value atm

Fun-Sundae4060

For someone with zero knowledge of trading or investing, I would just recommend the good old buy and hold strategy. Basically pick some diversified ETFs, buy and keep buying. Example portfolio: 80% VOO, 10% EDV, 10% IAUM 80% equities, 10% long term bonds, and 10% gold

Fun-Sundae4060

For someone with zero knowledge of trading or investing, I would just recommend the good old buy and hold strategy. Basically pick some diversified ETFs, buy and keep buying. Example portfolio: 80% VOO, 10% EDV, 10% IAUM 80% equities, 10% long term bonds, and 10% gold

sb0918

I had no clue either - I use ChatGPT to help explain a lot of these investing strategies and comments. Hope this helps: What you’re talking about—EDV (Vanguard Extended Duration Treasury ETF) and SGOV (iShares 0-3 Month Treasury Bond ETF)—reflects two very different ends of the bond duration spectrum. Using them in turbulent times can be a way to de-risk or stabilize a portfolio, depending on your outlook. Here’s what they mean in context: ⸻ EDV – Long-Term Treasury Bonds • What it is: EDV holds long-dated U.S. Treasury STRIPS, which are zero-coupon bonds maturing 20+ years out. • Use in turbulent markets: • Pros: Tends to rally hard when interest rates drop, often during recessions or deflationary shocks. • Cons: Extremely interest-rate sensitive (high duration), so it can fall sharply when rates rise. • Why use it: If you’re expecting a flight to safety, falling interest rates, or a deflationary environment, EDV can act as a hedge or even provide strong gains. ⸻ SGOV – Very Short-Term Treasury Bonds / Money Market Alternative • What it is: SGOV invests in ultra-short-term U.S. Treasuries (0–3 months), basically giving you Treasury-backed cash. • Use in turbulent markets: • Pros: Low risk, very stable, earns yield with minimal volatility. • Cons: Won’t go up much in value, just gives you yield. • Why use it: It’s a parking spot for cash where you still earn some return (currently decent thanks to high rates), without taking on much market risk. ⸻ How They Work Together in a De-Risking Strategy • Barbell Strategy: Some investors use a barbell approach—putting part of their portfolio in long-term Treasuries (EDV) to benefit from rate cuts or recession scenarios, and the rest in very short-term Treasuries (SGOV) for safety and yield. • This can reduce equity risk while still giving you some exposure to rate-sensitive upside. • You’re hedging both directions: deflation/market crash with EDV, and interest rate uncertainty with SGOV. ⸻ Bottom Line In turbulent times: • SGOV = capital preservation, liquidity, yield without risk • EDV = high-risk/high-reward hedge for falling rates or deep recession • Using both can be a balanced de-risking approach that still positions you for some upside if conditions deteriorate.

Fun-Sundae4060

Long term treasury bonds and very short term MMF EDV and SGOV for derisking

Fun-Sundae4060

Basically I set half my money aside to do buy and hold portfolio investing. It’s 40% QLD, 30% EDV, and 30% IAUM. The other half is high-risk trading. My main trades are all in TSLA, mixing short and long positions through TSLL and TSLQ. My position changes every few days or even daily. The trading portion of my portfolio has been rapidly gaining money while the investing portion has been losing. It’s allowed me to accumulate more capital so I can later funnel the excess capital to the portfolio side.

everythingman220

I’m (27m) switching to a 90/10 (stocks/bond) portfolio because I want to be a bit less risky. I had 10% left of my Roth IRA contributions, so that went to EDV (chose this since I have 33 years left and want to stick to treasury bonds). I also shifted my TSP from a 75/25 C/S fund split to a 72/18/10 C/S/F fund split. Just in case it matters, I also have $54k in USFR to save for a down payment. Yes, I have an emergency fund put aside in a HYSA. My question pertains to adding EDV to my taxable brokerage. I know that bonds are considered tax-inefficient, but will it really be that bad if I mirror my allocation at such a low allocation %? (I’m in the 24% federal (5.75% state) tax bracket if anyone wants to do tax math)

kiwimancy

Are we looking at different funds? EDV is Vanguard's ultra-long duration bond fund.

neutral_good-

EDV with DRIP/reinvestment on.

drdrew450

Long bonds? I have 10% in EDV. I agree with what you wrote, though I don't know what happened in 2016-2017. All I remember is Trump telling Powell to lower rates.