Why I Hate Total Bond Market Index Funds

By Dr. James M. Dahle, WCI Founder

“Hate” might be too strong a word, even if it did get you to click on this article. I don’t hate total bond market index funds and ETFs (TBM). It can even be a reasonable component of a solid investment portfolio. It’s just not my preferred bond option. Considering that a total stock market index fund is my favorite mutual fund and a total international stock market index fund comprises a good chunk of my portfolio, it’s a little odd that I don’t like the third member of the “three-fund portfolio” triumvirate.

However, I think I’ve got a few good reasons for this. Want to know what they are? Keep reading.

 

What Is a Total Bond Market Fund?

First, let’s define what TBM is. We’ll use Vanguard’s version (BND) as our example, although there is a handful of other good (and nearly equivalent) TBM funds/ETFs out there. This discussion applies to all of them. As of May 1, 2022, TBM is a fund that holds a representative selection of the vast…

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This article was written by The White Coat Investor and originally published on www.whitecoatinvestor.com