I invested in this ETF last year for international exposure; I also wanted Japanese exposure since they were getting hammered afer the tsunami. The fund invests in short term foreign bonds, namely Japan (18%), Germany (10%), France (8%), Italy (6%). Yield is around 5% but this is the worst performing investment in my portfolio (down 11% since purchase). I don’t know why the fund is down this much, since there’s minimal interest rate risk. 35% of the portfolio is unrated, are investors wary because of this fact? I feel like I don’t have the complete picture here.
Uh, strengthening dollar due to repeated flights to safety? And when risk goes on, people tend to rush to equities and commodities more than foreign bonds.
Haha really? Looks like I’ll picking up more of this. I love when people panic and flood to what’s perceived as “safe.”
Does the 11% decline include the 5% payout? If so, it’s not hard to imagine bonds of those countries dropping about 6%. Sovereign bond yields have been going up for many European countries due to the current clown show.
Are you sure you love it? Because you were just complaining that this is the worst performing investment in your portfolio.
And BTW, all of this stuff is supposed to be “safe.” They’re short duration sovereign bonds/notes. Just because the US is the least dirty shirt in the hamper, it sounds like you are buying something that’s supposed to be safe, then laughing at other people who are running for something that’s actually safer. Or you are reaching for yield.
If you think the darkest hour for Europe has passed, then this is a good investment. Otherwise, tread carefully.
I think the darkest hour has passed. For the EU to simply let Greece or any of the other PIGS collapse would be borderline negligence.
Why would you invest in bonds if you wanted exposure to japan after the tsunami? buying the topix or nikkei would have been a better way of getting that type of exposure. Not that it makes any difference, you wouldve been hammered either way. Im just wondering about why you decided on treasuries rather then equities, because usually when things get better capital flows to the risky assets.
I’m already invested in EFA but I wanted additional exposure without significantly increasing my risk profile by diversifying through treasuries.