2Sem.·

Bond ETFs, the safe way to park money?

I am currently looking for an asset to build up and park a monthly sum via a savings plan for 2 to 3 years. Stability, security and a little return are important to me.

One option would have been the TradeRepublic cash account with its current 3% interest rate. However, I don't like the fact that I can't tell the difference between parked money and free capital.

During my search, I came across bond ETFs with distributions that could provide me with exactly that with my current knowledge.

My option: $IBTU (-0,89 %)

The iShares USD Treasury Bond 0-1yr UCITS ETF invests in short-term US government bonds with remaining maturities of 0 to 1 year. It offers a high level of security, as the bonds are guaranteed by the US government, and is ideal as an alternative to call money accounts or for capital preservation. The main risks are exchange rate fluctuations (USD/EUR), low returns in periods of low interest rates and the effects of inflation. Perfect for security-conscious investors!

Have I overlooked something in my considerations? Do you have a better alternative?

https://www.ishares.com/de/privatanleger/de/produkte/307241/ishares-treasury-bond-0-1yr-ucits-etf

#anleihen
#etfs
#kapital
#sparen

www.ishares.comVielfältige Anlagelösungen mit iShares ETFs | iShares DE - BlackRock

40 Commentaires

Chandra@Chandra

2Sem.

Maybe take a look at $XEON?

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DerDanner@Therapeut

2Sem.

@Chandra How exactly does this work, are there phases in which the interest rate decreases or makes losses?

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Chandra@Chandra

2Sem.

@Therapeut This is basically the ECB's interest rate (€STR - Euro Short Term Rate). If the ECB's interest rate were 0%, the ETF would fall very slightly as it has a ter of 0.1%.
You can see this quite well on the long-term chart. In the zero interest rate phase of the last decade, it fell slightly and when the ECB raised interest rates in 2022, it went up again.
I don't think we'll get back to 0% any time soon. But in any case, it won't come as a surprise from one day to the next and you'll notice it because suddenly everyone is buying houses again and cheap loans are being thrown at you.
It will be difficult to find more than the ECB's interest rate, even with overnight money (i.e. at Trade Republic etc.), as the banks only park your money with the ECB and pass the interest on to you (minus a bit for themselves, presumably)

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DerDanner@Therapeut

2Sem.

@Chandra Thank you for the detailed explanation 👍

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JJ-Invest@JJJanson

2Sem.

I also find this option extremely relaxed, solid and low-risk for short-term investments.
Sure, you can get a little more return here and there, but that's not usually the point of parking money. Comfort is much more important to me

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Dominik@Dominik_76

2Sem.

@Therapeut The money market/bond/bond ETFs can all slip into the loss zone, so you should keep an eye on the prime rate and the KID. But I use the bond ETFs as a safety building block, if they still yield something then it's okay as an add on, but I don't feel like moving the cash back and forth between call money accounts every few months to get the most out of it.

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DerDanner@Therapeut

2Sem.

@Dominik_76 i.e. where have you parked your money now?
What do you think of my proposed ETF? I think it's quite nice that it pays out dividends

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Dominik@Dominik_76

2Sem.

@Therapeut I have found another distributing low-risk bond/bond ETF iShares eb.rexx Government Germany 0-1 y UCITS ETF $EXVM

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DerDanner@Therapeut

2Sem.

@Dominik_76 Thank you for your research

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DerDanner@Therapeut

2Sem.

@Dominik_76 Your selected ETF makes 0.7% per year😅 then I could also stay with 3% Trade Republic or am I reading that wrong?

What do you think about that?
https://www.finanzfluss.de/informer/etf/ie00b4py7y77/

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Dominik@Dominik_76

2Sem.

@Therapeut If it pays out dividends, the price return is reduced by this value. The distribution must be included again in the calculation of the total return. According to Blackrock, $EXVM did not have a total return of 0.7% in 2024, but 3.4%. This year it will be lower if the ECB cuts further.
https://www.ishares.com/de/privatanleger/de/produkte/251779/ishares-ebrexx-government-germany-0-1yr-ucits-etf-de-fund#/

The high yield you selected is not a low-risk security component for the portfolio, it would not be suitable as an overnight money equivalent, rather as a yield driver, also has the currency risk due to USD. The default rate of the loans is higher and they are corp bonds, i.e. corporate bonds.

Prof. Walz's blog is quite good on the subject of bond etfs and which ones for what purpose:

Bond ETFs Part2 - Prof. Dr. Hartmut Walz https://search.app/tmwPe1JfDqqvv87f6

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Uwe@SchlaubiSchlumpf

2Sem.

I haven't really looked into exchange rate risks, as they haven't really played a role for me so far. But I think the exchange rate risk works against the desire for a safe solution here, as exchange rates can make a lot of nonsense in the short term. Personally, I would go for a slightly lower-yielding option in my own currency.
But as I said, I haven't looked into it that much.

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DerDanner@Therapeut

2Sem.

@SchlaubiSchlumpf i.e. if the euro outperforms the dollar, does the yield in the chart fall? Or how does the exchange rate develop instead?
Would you then bet on euro bonds?

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DerDanner@Therapeut

2Sem.

@SchlaubiSchlumpf had linked the wrong ETF look again $IBTU

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Uwe@SchlaubiSchlumpf

2Sem.

@Therapeut That's exactly what I mean. A euro short bond ETF should be more stable. You can think of it as exchanging euros for dollars and then investing the money with American interest rates. Last year that was advantageous. In the long term in the past, it wasn't dramatic either. But it could be disadvantageous in the event of a dollar devaluation as part of a crisis caused by new trade conflicts in the USA, for example. My personal assessment. But I only have layman's knowledge. So you should definitely do some independent research.
Of course, there is potential for returns.

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DerDanner@Therapeut

2Sem.

@SchlaubiSchlumpf Thank you very much, I'll take a look👍

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PowerWordChill@PowerWordChill

2Sem.

@Therapeut @SchlaubiSchlumpf is right, if the euro appreciates against the euro, you will notice this in the price. So it can happen that you can lose (or gain) 30% in 3 years.
I therefore recommend European money market ETFs such as $CSH2

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DerDanner@Therapeut

2Sem.

@PowerWordChill i.e. would my S&P500 ETF on a USD basis also be subject to currency risk?

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PowerWordChill@PowerWordChill

2Sem.

@Therapeut It doesn't matter in which currency an equity ETF is denominated.
The S&P500 consists almost exclusively of US companies, so you automatically have a dollar dependency.

As an example, the S&P500 in dollars ( $SPY ) has made approx. 29.3% in the last 3 years. (calculated in dollars)
If you now sell this ETF and get the dollars, and then convert them into euros, you have made a return of approx. 45.3%.
A Swiss investor would only have made 25.2% with the same ETF.
So if the euro appreciates against the US dollar, you have less return, but you get more shares for your money when you buy more.

Unless you buy ETFs with currency hedging, which I would not recommend.

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DerDanner@Therapeut

2Sem.

@PowerWordChill Thank you for your detailed answer🤲

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Uwe@SchlaubiSchlumpf

2Sem.

@PowerWordChill With currency hedges, I would have a fluctuation anyway, whether I have exchange rate risk or not. The expected value for me is 0, since it can go either way, this is not a big additional risk with the volatility of an etf. But the hedge costs money. That much. That, as far as I know, it destroys the extra interest I would get in the USA

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Epi@Epi

2Sem.

The ETF is essentially a bet on a rising USD. Quite speculative and volatile, especially with Mr. T. I have one of these running in my GTAA model right now.

Your idea of a safe investment is more in line with a hedged US short: $PR1H

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DerDanner@Therapeut

2Sem.

@Epi too bad and I thought I had found the thing😂
Is there no bond ETF that distributes shares and is relatively stable?

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DerDanner@Therapeut

2Sem.

@Epi wouldn't I have the same currency risk with yours?

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Epi@Epi

2Sem.

@Therapeut $XEOD 😁

At $PR1H you only have the risk of your own currency: EUR. 😏

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Dominik@Dominik_76

2Sem.

@Therapeut Have a look at Justetf or Extraetf or Finanzfluss in the etf search. Choose bonds, money market, bonds, government bonds, highest or high credit rating, euro or euro-hedge, short term and distributing. I take accumulating ones, because I already pay enough to the tax office and the saver's allowance is exhausted. if you are looking for a safety anchor, you should not take a foreign currency, which then becomes speculative. It's okay with shares, that's the return component and you accept that.

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Iwas M.@SSIT

2Sem.

$EUHA would be my choice. But bear in mind the spread costs. So over a few months, it's not even that good, but over a savings phase of years, the additional return compared to the usual money market ETFs should be clearly noticeable.
$PJSR the somewhat safer, but also lower-yielding choice. The same applies here with the spreads and the term.

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DerDanner@Therapeut

2Sem.

@SSIT both have relatively high costs of 0.5 and 0.35 TER

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Iwas M.@SSIT

2Sem.

@Therapeut On the ETF comparison sites and also with my broker (Scalable), the latter is quoted at only 0.19%.
The High Yield is indeed expensive, that's true. But as long as the return is right in the end, I would swallow this toad.

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Dividendenopi👴@Dividendenopi

2Sem.

In the short to medium term, unfavorable exchange rates have a greater impact on your investment. If you save now and then leave it for a longer period of time, at least the past has shown that exchange rates are priced in. For the moment, the dollar is expensive again, I'm happy, my USD fixed-term deposit expires at the end of next week, so there's a currency gain on top of 5% interest. If that hadn't been the case, I would have had to leave the money and then convert it when it suits. You can also buy ETFs hedged, but that costs money and is at the expense of the return. To build up a hidden reserve, forgo the return and reduce the risk and take euros. My humble opinion

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DerDanner@Therapeut

2Sem.

@Dividendenopi thanks for your message, would you have a euro-based ETF for me?

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Dividendenopi👴@Dividendenopi

2Sem.

@Therapeut sorry, I can't help you with that. I invest directly in government bonds or corporate and equity bonds with absolute amounts, so no savings plans

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Schumi150@Schumi150

2Sem.

If you want to park the money, distributions make little sense. With a standard all-world ETF, the return is technically much better

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DerDanner@Therapeut

2Sem.

@Schumi150 the thought was that Allworld could suddenly make losses during the time I need the money

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Schumi150@Schumi150

2Sem.

@Therapeut I think this is highly unlikely for 3-4 years. I once faced the same situation. I ended up withdrawing the money for a car (had to🙂). It worked out great. Of course, nobody has a crystal ball, but experience has shown that it makes sense to simply put the money into your standard savings plan (if you have one). By continuing to save and making favorable direct purchases, depending on the price, you keep the risk lower and get more out of the 7% p.a. My humble opinion Einschätzung✌🏻

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Dominik@Dominik_76

2Sem.

I focus on short-dated bonds in the domestic currency, be it Euro Gov or German Gov Bonds or Corp Bonds or money market SWAP. I have oriented myself to Kommer and Walz. For European Gov Bonds I have the 0-6 month bond ETF from Amundi Govies 0-6 M Euro InGrd ETF DR C ISIN: $C3M

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DerDanner@Therapeut

2Sem.

@Dominik_76 I'll take a look👍 depends on the prime rate, right?

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Dominik@Dominik_76

2Sem.

@Therapeut The Amundi Euro Govies are slightly below the key interest rate and are government bonds from the euro zone with maturities of 0 to 6 months. Prof. Walz once mentioned them. Then I also have the relatively new ultra-short corporate bond ETF from Ishares: iShares € Ultrashort Bond ETF - The ticker is $ERNX, ISIN: IE000RHYOR04 The yield is a shot above the Govies. It contains around 500 corporate bonds with good credit ratings. I found it on the Kommer website. It is also available as a distributing variant. This is the ERNA. Then I have the $XEON and also a 0-1y Germany Gov Bond from Xtrackers $XG01. What I'm still thinking about is an Emerging Market Gov Bond Etf Euro-hedged with a short term. But there are only a few.

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Andreas M.@thor88

2Sem.

I use $IBTS 1- 3 years bonds for the past two years in a 90 VUSA / 10 IBTS portfolio. It's pretty OK up to now.

Otherwise for EUR you can do XEON i got 3.10% for the current year, not bad for EUR.

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