Swiss government bonds, bond funds

I would argue that Pillar 2 buy-ins are safer - with their guaranteed 1%+ payback; whereas property can depreciate.
On the other hand debt repayment should be on one’s mind, agreed.

Paying off debt is not investing into property, it is the removal of debt. This is even safer than government debt as there is no counterparty risk when reducing your interest payments.

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Then how’d you call the risk of CHF devaluation to an extent where you cannot afford going on holidays abroad anymore, let alone emigrate, if you ever want or - God forbid - have to?

Both USD and EUR have devalued >50% vs. CHF in the past decades, don’t you think it could go the other way round too? Obviously, you don’t seem to have any Turkish or Argentinian friends. Ask them how they feel about their short-term bonds :joy:

Short-term bonds may be “safe” in nominal terms. In real terms, they’re definitely not. Also, volatility does not equal risk.

I do not think there exists any such thing as a “safe investment”. It’s all risky, just in a different way.

That’s not called currency risk. :grinning:

(And while it’s good to keep those things in mind I’d argue that there are no imminent threat of that happening and insuring against low probability risk can be overkill, Argentine or Turkey economies didn’t turn this way overnight either, right?)

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Ok, let’s call it a different type of risk then, I don’t mind :smile:

Well, no safe haven lasts forever. Argentina used to be the pearl of Latin America, while Switzerland used to be the poorhouse of Europe.

BTW, it took the Turkish lira 2 years to loose 75% vs. CHF. Doesn’t seem too slow of an evolution to me :sweat_smile:

Don’t forget, our dirty little bank secrets have been revealed, Swiss banking has lost it’s status to Singapore, London, Hongkong and the US. Now maybe add a populist party rising, messing up our democracy & economy, and you’ve got your devaluation. Just look at some of our dear neighbour countries.

I’d put it under inflation risk. It is, afterall, a reduction in the buying power of my money for things like travel and buying things abroad. Instead of having products imported in my country and being more expensive (inflation), I am exporting myself in other countries and my money buys less there (whatever this is called). Conceptually, it’s the same thing to me.

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I’m thinking of investing in CSBGC3:
iShares Swiss Domestic Government Bond 0-3 ETF (CH) | CSBGC3
It invests in short term government bonds () and has a yield of nearly 2% and yield to maturity of 1.7years.

How long should I keep my money invested in this ? I imagine until the bonds arrived at maturity right ?

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My understanding is you should match the duration of your bond fund with your investing horizon, meaning that if, as time passes, your spending horizon for the money you keep in that fund goes below 1.7 years, then part of it should be in cash to bring the effective duration of your cash+fund mix in line with your planned expenses.

There are three iShares ETFs for short-, mid- and long-term Swiss Gov’t bonds.

Here are the performances over the last 10 years:

iShares Swiss Domestic Government Bond 1-3 CH0102530786 (Factsheet)

iShares Swiss Domestic Government Bond 3-7 CH0016999846 (Factsheet)

iShares Swiss Domestic Government Bond 7-15 CH0016999861 (Factsheet)

Are these performances including the dividends that were paid out?

You mixed up the order of those graphs, I think.

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I was about to say it seems strange that there was such a large movement on short duration bonds and vice versa for long. It looks like 2022 was the time to buy CHF bonds!

Whoops, my bad. Fixed.

2022? The year Russia attacked Ukraine and threatened nuclear war every three days, whilst stocks and bonds went down in lockstep. Just after all the COVID seemed to fizzle out.

We now know better, but if prices reflect information, there was a chance for worse.

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Typically, buying when things are bad and people expect it can only get worse is the best time to buy.

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My question at the bottom of the charts probably got lost:

But I answered it myself in the meantime: these values are including dividends. There’s even a fantastic little chart on justetf.com where you can see the part of the profit/loss that is dividends.

2 posts were merged into an existing topic: CHF corporate bonds