Bond investments

[Baptiste Wicht]

Dumb question from my side: why should investors living in Switzerland only invest in Swiss bonds? (this is the only discussion I see here).

Why not invest in US bonds, or bonds from other countries?

For me (and not everybody agrees), it's because of currency. Bonds are to reduce the volatility of your portfolio. If you get US bonds, they are in USD, so you introduce a new form of risk with currency risk. So, for me, CHF bonds make much more sense.

 

[gaijin]

Just to expand the post of @Baptiste Wicht . For me, the complexity of bonds are inversely proportional to their return. Investing in bonds from other countries introduces the discussion (and decisions) about their credit rating, making the selection of 'good' bond investments even harder and more complex.

Maybe it's just my fading memory, but don't other countries have bonds in CHF? I vaguely remember some countries of Eastern Europe giving out loans (and bonds?) in CHF, since it's considered to be a strong and stable currency. This would not be a currency risk but a pure creditor risk.

 

[Baptiste Wicht]

Maybe it's just my fading memory, but don't other countries have bonds in CHF? I vaguely remember some countries of Eastern Europe giving out loans (and bonds?) in CHF, since it's considered to be a strong and stable currency. This would not be a currency risk but a pure creditor risk.

Interesting, I did not know that. Looking into it, there seem to be multiple foreign issuers of CHF bonds.
Multiple Swiss banks even funds with "CHF Foreign Bonds".

 

[Sjs]

Good morning,
This thread is very interesting conceptually, but at the end of the day, do any of you actually invest in bond ETFs and if so which one (s), or is the conclusion that it is simply not worth it at the moment and better to stick to cash instead?
I am reviewing my finances at the moment and designing a simpler portfolio and have to decide what to do with my current 20% bond ETFs. I am a year away from FI so negative returns actually matter.
Thanks!
Sjs

 

[gaijin]

do any of you actually invest in bond ETFs

I don't.

better to stick to cash instead

For low amount, yes I think it is. The problem with cash are withdrawal restrictions. I think UBS lets you withdraw 50k without previous notice. But most banks limit the free yearly withdrawal to 10k or 20k.

designing a simpler portfolio and have to decide what to do with my current 20% bond ETFs

Would you mind sharing what you mean by simpler? Also, what's your withdrawal strategy for FIRE? To me, 20 bond ETFs sound quite reasonable on first sight.