Yes, but then you wouldn't be looking to change the bond fund because it had losses in 2022, would you?One good example is the usual reality of people withdrawing from a portfolio of stocks and bonds in many small amounts over a long time. That would mean, for example, over a course of a span of perhaps twenty to forty years selling off a couple or three or four percent of the holding every year. There is also a basic conceptual split between the idea of matching bonds to a liability and the idea of withdrawing small amounts more or less continually from an allocated and rebalanced portfolio of stocks and bonds. What is the duration and the liability of a 60/40 rebalanced stock bond portfolio drawing down at a few percent per year for however long a person stays alive?Beyond knowing about the rate effects on the bonds, if you needed to sell portions of the bond fund in 2022 to spend, then why were you in a bond fund with a longer duration that would be impacted in a 1 year timeframe?Many of us unsophisticated investors were surprised when our bond funds dropped in 2022. We did not understand or appreciate how rising interest rates would so dramatically affect our bond fund NAV ‘s. I am wondering if there may be similar surprises in a TIPS fund. Eg, I read that CPI inflation is not the only factor that affects TIPS yield. Yields on Treasuries themselves can affect TIPS yield. I do not understand how that happens but sure someone here will explain it.
Also, similar to holding a bond fund vs individual bonds, are there pitfalls to holding a TIPS fund vs individual TIPS? Thanks.
Statistics: Posted by TimeIsYourFriend — Wed May 08, 2024 12:41 pm