Indexor

International Bond ETFs' Correlation to Equities

Here's a thought:

Take each of the four foreign bond ETFs you mentioned - BWZ, BWX, JGT and WIP - and compare each one to UUP (PowerShares US Dollar Bullish) on a charting service, such as stockcharts.com. You will find each of the foreign bond ETFs have a strong negative correlation to UUP.

While we are always looking for issues that provide additional diversification through negative correlation, do you find that foreign bonds are simply a good diversifier because of their currency "effect?" In other words, as long as the dollar continues to weaken, foreign bonds should provide both diversification and alpha. But if the US dollar begins to strengthen, won't foreign bonds prove to be much less of a diversifier and produce negative alpha just when global stocks are also entering a downward trend?

Just 5 ETFs and You're Set? Buy-n-Hold Silliness Still Carries On

Gary:

Consider your sources: John Bogle? Motley Fool?? Money Magazine???

It might be time to broaden your information horizons.

28 Key Asset Categories: How Do They Compare?

Hmmm..."Prudent Man CFA" is an options trader? That seems like a bit of a dichotomy in and of itself.

I agree that investing is more art and less science. And as Richard Shaw has provided for us once again, his version of art has painted a colorful canvas that many of us non-CFA's find extremely beneficial. While it may be void of continuously diminishing intrinsic values, I find it full of useful ideas, among a broad array of asset classes, that mere mortals might actually use to make money.

Thank you Mr. Shaw.

15 Key Types of Bond ETFs: 2008 Review

Steve:

You want Intermediate-term corporate bond ETFs?

iShares - Barclays Intermediate Credit Bond ETF (CIU)

also consider:

iShares - Barclays 1-3 Year Credit Bond ETF (CSJ)
iShares - Barclays Credit Bond ETF (CFT)


If you're willing to accept a combination of Government/Credit Bonds:

Vanguard - Intermediate-Term Bond Index ETF (BIV)
iShares - Barclays Intermediate Government/Credit Bond ETF (GVI)
iShares - Barclays Government/Credit Bond ETF (GBF)

Do Emerging Market ETFs Really Help You Diversify?

(Note: During a raging bull, as long as you've got stocks, you're making money. It hardly matters that all of your stocks overlap because you're experiencing gains. Yet in a bear, low-correlating/non-co... correlating assets buffer the adverse effect of stock depreciation. And that's the real reason we "diversify.")

Note: During a raging Bear, as long as you've got stocks, you're losing money. It hardly matters that all of your stocks have low correlation values because they can't buffer the adverse effect of stock depreciation. And that's the real reason we sell all stocks.

The iPath Dow Jones-AIG Commodity Total Return ETF (DJP) is not a stock fund. Neither is the SPDR Lehman International Treasury Bond ETF (BWX). That is why diversifying among different ASSET CLASSES as opposed to diversifying among different STOCKS can provide profits. Your continual pitch for the WisdomTree Emerging Market High Yield ETF (DEM), with inaccurate yield assumptions, is disturbing as it is still a STOCK fund and has lost money in this Bear market.

The only place for STOCK allocations (outside of the safety of cash) if you must be fully invested at all times is inverse stock funds, which take the opposite side of the trade for the specific sub-asset class you wish to own. As an example, rather than the WisdomTree Emerging Market High Yield ETF (DEM) which has lost money, compare that ETF to the ProShares Short MSCI Emerging Markets ETF (EUM), which does not apply leverage. Which would you have rather owned?

Disclosure: Writer has previously owned DJP and currently owns BWX.

El-Erian's Recommended Allocation vs. Harvard, Yale

Mebane: Excellent article, as always. I always look for your posts as we share very similar phiosophies on managing assets.

As Xyrus mentioned, that is my allocation strategy as well, including the specific ETFs, although I am weighted a bit diferently.

Thank you.