ZROZ Etf
Moderator: Global Moderator
-
- Full Member
- Posts: 83
- Joined: Sat Sep 10, 2016 1:50 pm
ZROZ Etf
Does anyone here use ZROZ for the bond portion or a part of the bond portion of the PP? A backtest shows that it juices the returns and volatility just a bit. Any downsides?
Re: ZROZ Etf
If you're in a taxable account, you have to pay Federal income tax on the IMPUTED interest from a Zero coupon bond. I've no idea how to do that computation. Sounds like a pain, to pay tax even though you haven't gotten any interest payments.
If interest rates go up more, the losses will be more severe than even a regular long US Treasury. If they go down, the gains will be more. Yes, more volatile.
If interest rates go up more, the losses will be more severe than even a regular long US Treasury. If they go down, the gains will be more. Yes, more volatile.
-
- Full Member
- Posts: 83
- Joined: Sat Sep 10, 2016 1:50 pm
Re: ZROZ Etf
Any reason why I couldnt make the bond component TLT 20% and ZROZ 5%? Wouldnt the philosophy still hold even if the volutility rises a bit?
Re: ZROZ Etf
Rather than buy a zero, you could buy a Treasury at a discount that offers a smaller coupon; one issued in mid-2016. Then you'd pay less tax up-front in a taxable account, AND when the bond matures, you'd pay capital gains tax, which is a lower rate, and no stinking imputed tax. I might do that, I'm getting ready to re-buy Treasuries. I tax-loss harvested in late February.