Bonds?
Credit for an equity guy.
I’m mostly an equity guy. The vast majority of my investments have been equities. What cash I keep is mostly for buying stocks in chunky abrupt increments, such as when I get favorable access to offerings. The S&P 500 has had an average total return of about 10% since 1926. I have no expectation for better than that and would be more than happy with somewhere around that return for the next hundred years. The best way that I know of to capture that equity return is to invest in the Frec S&P 500 direct index.
For me to get interested in bonds, they have to be better than simply putting more money in the S&P 500. If I just want passive exposure to the asset class, I’d use the Alpha Architect Aggregate Bond ETF (BOXA), a more tax efficient equivalent of the iShares Core U.S. Aggregate Bond ETF (AGG). That’s okay for money I need within a few years, but for the most part it is inferior to the S&P 500.
To date my biggest fixed income exposure was in South Jersey Industries, Inc., 5.625% Junior Subordinated Notes due 9/16/2079 (SJIJ). JPMorgan’s (JPM) Infrastructure Investments Fund bought South Jersey Industries without calling their notes. The notes had traded publicly so they imploded when they got delisted. It was a chance to exchange the appearance of total illiquidity for the benefit of a low price.
I was able to buy millions of dollars of these notes for $12–13, around half of where they had traded before the acquisition and delisting. At that price, they paid a double digit yield. I knew management, having previously sold back to them another security class. I suggested a self-tender. They did one at $18 then bumped it to $20 where I participated. I have my next one of these in my sights for when it delists.
My favorite platform for bonds is Public. You can buy Cardlytics Inc. (CDLX) bonds with a ~21% yield or a Ypf Sa bond with a ~10% yield (I own both of these equities but might buy their bonds at some point too). Ypf has benefited from President Javier Milei’s spectacular transformation of Argentina’s economy from disastrous to functional. You can buy $1,049 worth of Ypf bonds (YPFD), get a $20 sign up bonus and over $100 of coupon payments each year. Recently both YPF in particular and equities generally have done far better, but this bond is likely to keep up with equities going forward while smoothing the volatility of your returns.
Caveat
This is generally my least favorite asset class.
Conclusion
I am heavily weighted towards equities, but selectively buy a few bonds here or there.
TL; DR
I buy bonds only here and there; you might want to buy some CDLX or YPF bonds on Public.
