I know very well that bonds are something that can be sold at a higher price when times are rough, because the Government will adjusts its monetary policies according to the economy, and the interest rate usually fall so that people spend more and limit the damage of the recession. While that is true for bonds (correct me if it isn't), i was wondering if it is also true for Bonds ETFs. At first they seem to offer the same thing, but the ETFs are way more liquid and they cannot be exchanged for the "Bond original value".
I actually want to greatly reduce the % of stocks i have to take cover and hedge, but i am not sure if Bonds ETFs are a good idea and if they are great during bad times.
Thanks for the help.
Edit: According to Investopedia
«Bond ETFs are a great option to gain exposure to the bond market, but there are some glaring limitations. For one thing, an investor's initial investment is at greater risk in an ETF than an individual bond. Since a bond ETF never matures, there isn't a guarantee the principal will be repaid in full. Furthermore, when interest rates rise it tends to have an adverse effect on the price of the ETF, like an individual bond. As the ETF does not mature, however, it's difficult to mitigate interest rate risk.»
Submitted April 15, 2018 at 05:03PM by Shukar_Rainbow https://ift.tt/2qA2hoX
