Is there a point in holding bonds?

Investing / Portfolios
#1

Hello fellow Mustacians,

is there a point in holding bonds? Government bonds offer no interest and corporate bonds are correlated with the SP500.

I wanted to do an allocation 65% VWRL, 35% bonds but now I am thinking instead of bonds I should just keep 35% cash and re-balance every 3 months.

What do you have in your portfolios, bonds or cash? Which UCITS ETF is recommended to buy? I saw Vanguard is offering the following:
Global Aggregate Bond UCITS ETF (VAGP)

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#2

Cash + mostly counting pillar 2 as “bond”.

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#3

You’d likely want something hedged to CHF (with the expected return being that of the negative CHF yield).

#4

That is fine.

My current and future salary is in CHF (I am under 30y. old), my pillar 2 is in CHF. I would be fine with losing money in a bond due to CHF getting stronger since I will offset this with my salary being worth more.

My original question is related to the 2-fund advice often given to people, that government-bonds do not correlate well with stocks or correlate negatively.

So in a market collapse you can sell bonds which rise in value over time in order to buy stocks to re-balance your portfolio.

Since interest rates are 0 or near 0 does this still hold? Is there any benefit over holding cash that I am overlooking?

#5

AFAIK that advice might only be useful if you hold bonds your “base” currency, otherwise it’s not really a stable/safe investment.

https://www.institutional.vanguard.ch/documents/institutional/going-global-with-bonds-uk-eu-ch.pdf should explore that a bit (but there’s lots of similar pdfs from e.g. vanguard).

#6

I have a bit of cash parked into Vanguard’s BND and I kind of like it as it is quite stable and still gives back some return. Just look at March this year where VT was down over 30% BND was down 5%. I also consider my 2nd pillar as bonds but to be honest have no clue what instrument is behind them…

#7

Anyone knows if trading view can show total returns? If so something like https://www.tradingview.com/chart/?symbol=NASDAQ%3ABND*USDCHF (but with total returns) should be a good demonstration of USD bonds vs. CHF cash.

#9

This means if you have over 100,000 CHF in your cash bank account buy bonds just in case of a bank default ? (My cantonal bank has a government guarantee for 100,000)

#11

Or open several bank accounts?

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