Posts

Vanguard Core Bond ETF VCRB - Inexpensive Intermediate term Total Bond fund - Good substitute for Vanguard Total Bond Market ETF BND

I believe *actively* managed Vanguard Core Bond ETF (VCRB) is better substitute to 2 decades old *passive* (market value weighted) Vanguard Total Bond Market ETF (BND). In fact, market value of a bond offering doesn't make any sense to be a criteria to allocate more weight (allocation of money) to that bond offering. That's one reason why actively managed bond funds have been outperforming passive bond funds. Normally actively managed bond funds have higher expense ratio, but VCRB is an exception with just 0.10% expense ratio. As such, above bond fund should be used only for long haul investing such as in IRA or 401(K). Since they tend to be interest rate sensitive, we should *avoid* them for short term savings such as emergency funds.

SPDR® S&P Semiconductor ETF (XSD) - Excellent small cap semiconductor index fund

Recently I came across another *semiconductor* focused low cost index ETF which seems quite promising index. It's called SPDR S&P Semiconductor ETF ( *XSD*). Unlike iShares Semiconductor ETF SOXX ( https://financial-well-being.blogspot.com/2022/01/iShares-Semiconductor-ETF-SOXX-Passive-Semiconductor-technology-index.html ), which focuses primarily in *large* cap, XSD focuses into *small and mid* cap semiconductor companies of S&P Total index. It's *equal weighted* index and that's why it's average capitalization is in mid and small cap.Overall it's comparable or *even better* than SOXX. For example... - It's PE is comparable to that of SOXX - Dividend yield plus earnings growth of 16% as compared to lower 13% for SOXX - It's 3/5 year returns of 23/22% is 20% better than that of SOXX's 19/18%. It tracks *semiconductor small cap* sector which has been one of the top performer in technology sector with close to *20% annual return* for last 5, 10 an

PGIM Ultra Short Bond ETF PULS - Good ultra short-term total bond fund ETF

PGIM Ultra Short Bond ETF (PULS) is a good low expense (0.15%) ultra short-term total bond fund ETF. It invests into investment grade (AA rated) corporate and government bonds with effective duration of 3 months. It offers 0.50-1% better return than AAA rated ultra short treasury bond ETFs such as SGOV. I believe such extra return might be worth, in spite of little bit lower rating. It's going forward yield to maturity is currently 6.04%

iShares MSCI India Small-Cap ETF (SMIN) - Top performing Emerging Asia Pacific index fund ETF

Going forward I am thinking to add an *Emerging* Asia Pacific market ETF called iShares MSCI India Small-Cap ETF ( *SMIN* ). It's *top performer* for last 3 and 5 years period with annual returns of 22% and 13% for this emerging market segment. With 22% long-term *earning growth* projections, it's expected to produce top long-term return. As *country specific* fund, it's certainly concentrated and is more expensive (0.75% expense ratio). However, unlike other top performer ETFs, it's focus is not specific to any hot speculative industry. Also, it's capitalization falls into *mid* cap (borderline large cap) range, making it less aggressive than typical small cap etf. It's P/E of 22 is 10% higher than typical India equity fund. However, it's long term earnings growth projection of 22% is 30% more than it's category. So it's total return potential is still way (20-30%) higher than typical India equity fund. I am planning to build more position into it

Janus Henderson AAA CLO ETF (JAAA) - Highest yielding inexpensive ultra short investment grade bank loan corporate bond fund

I recently added a bank loan bond fund called Janus Henderson AAA CLO ETF (JAAA) to my bond holdings. It's an ultra short duration corporate bond fund typically yielding equivalent to prime minus 1. These are bonds of mostly *AAA* rated leveraged buyout private equity companies who typically finance leveraged buyout by borrowing from banks. Banks then sell these to investors by securatizing them. These bonds are typically for 3-5 years maturity. However they are floating rate and so they are insensitive to interest rate changes. As private equity corporate bond fund, it's certainly riskier bond fund. However, none of AAA rated such loans defaulted during 2001 and 2008 mega crashes. So, I have decided to take my chances with it. It's Yield to Maturity is currently 7.03%. This is one of the highest yield for any ultra short investment grade corporate bond fund with low 0.22% expense ratio. It's not even sensitive to interest rate as coupon is adjustable rate

iShares iBoxx $ Invmt Grade Corp Bd ETF (LQD) - Inexpensive Corporate Bond ETF

iShares iBoxx Investment Grade Corporate Bond ETF ( *LQD*) seems to offer 1% better return than Vanguard Total Corporate Bond ETF (VTC). Also it's bonds are better rated (A as compared to BBB) and it's expense ratio of 0.140% is comparable. Vanguard Interm-Term Corp Bd ETF (VCIT) has lower quality (BBB instead of A) and is less diversified. Accordingly, it should have produced better performance (than LQD) due to these added risks. But, it hasn't.

iShares 0-3 Month Treasury Bond ETF (SGOV) - Inexpensive ultra short term treasury bill ETF for emergency fund saving

iShares® 0-3 Month Treasury Bond ETF (SGOV) is ultra short term treasury bill ETF. It's expense ratio is near zero (just 0.07%) and it's latest (last 30 days) yield is 5.28%. Since it primarily holds US government bonds, this ETF is state and local tax exempt. Unlike CDs, there is no early withdrawal penalty. For saving money for emergency fund and short term goal expenses, SGOV seems like a good option. Since it is ultra short term bond fund, principal preservation is as good as any other money market fund.