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BLV: Inflation Is Picking Up, Not Good For Long-Term Bonds


  • Inflation gauges are starting to pick up, driven by economic reopenings and continued high levels of government stimulus.
  • As prices rise, the Fed will have more pressure to raise rates. As yields and rates increase, long-term bonds in particular will get hit hard.
  • BLV is a smart play if one expects an equity pullback. Given elevated valuations, this is possible. However, the downside risk for BLV is quite high if inflation and equities keep trending up.
  • This idea was discussed in more depth with members of my private investing community, CEF/ETF Income Laboratory. Learn More »
Inflation and piggy bank on seesaw
Photo by Yingko/iStock via Getty Images

Main Thesis and Background

The purpose of this article is to evaluate the Vanguard Long-Term Bond ETF (NYSEARCA:BLV) as an investment option. This ETF has a primary objective "to track the performance of the Bloomberg Barclays U.S. Long Government/Credit

Please consider the CEF/ETF Income Lab

This article was written by

Dividend Seeker profile picture

I began my career in financial services in 2008, at the height of the market crash. This experience has shaped my investment strategy - which is focused on diversification, dividends, and growth opportunities. I am a competitive tennis player, and I competed at the Division I level in undergrad. I have a Bachelors and MBA in Finance.

(He is a contributing author for the investing group CEF/ETF Income Laboratory where he specializes in macro analysis. Features of CEF/ETF Income Laboratory include: managed income portfolios (targeting safe and reliable ~8% yields) making use of high-yield opportunities in the CEF and ETF fund space. These are geared toward both active and passive investors of all experience levels. The vast majority of holdings are also monthly-payers, for faster compounding and steady income streams. Other features include 24/7 chat, and trade alerts. Learn more.)

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

Cuip99 profile picture
Not going to invest in bonds much less long term bonds as long as the FOMC is regulating the interest rates. Yes, inflation is coming and the whole fed control issue is going to blow up in their faces. I gave up on bonds mid way through the Obama regime.
Dividend Seeker profile picture
I can certainly appreciate that sentiment!
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