I’ve been revisiting the role of LTTs in my Golden Butterfly-ish portfolio and have really appreciated the depth of discussion here. Reading the recent “Safe Haven Status” thread prompted me to take another look at how I’m thinking about LTTs within this framework.
I understand the classic PP rationale: LTTs are held primarily as a deflation and recession hedge, not as a return engine. From that lens, 2022 looks less like a failure and more like an inflation/rate-shock regime where LTTs aren’t expected to shine. Still, it’s hard not to reflect on how that episode felt in practice and what it implies for correlations and drawdowns during inflationary periods.
My bond allocation is currently a STT/LTT barbell, consistent with PP/GB design. I’m thinking through whether, in real-world use, it still makes sense to:
a) keep the barbell as designed
b) substitute ITTs for LTTs
c) tilt more toward STTs and accept less convexity
For context, I hold some ~3%-yielding long-term Treasuries purchased in 2019 that are currently down -27%. I’m comfortable with duration risk conceptually, but I’m more interested in how LTTs actually function over long holding periods — particularly through full cycles of inflation, disinflation, and recession.
I’m not trying to forecast rates or inflation. I’m really just hoping to learn from folks who’ve actually lived with PP/GB allocations through multiple market cycles. How do you think about the role of LTTs today — in terms of diversification, rebalancing, and overall portfolio resilience over the long run?
Long Treasurys
Moderator: Global Moderator
Long Treasurys
"Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep in reserve."
- Talmud
- Talmud
Re: Long Treasurys
My concern with long-term treasury bonds in the PP has always been that their volatility and risk profile are not constant. They're both higher when rates are lower, and lower when rates are higher.
Fortunately, I found a solution here in Canada. I'm sure similar solutions exist in the U.S.
I found a long-term treasury bond fund that targets a specific duration rather than a specific maturity.
https://www.td.com/ca/en/asset-manageme ... l-Bond-ETF
The ETF is TCLB, and it targets a 15-year duration regardless of the prevailing interest rate. When rates are low, it buys bonds on the shorter side. When rates are high, it buys bonds on the longer side.
This helps to ameliorate concerns about the asymmetric risk-reward trade-offs of long bonds when rates are low.
Fortunately, I found a solution here in Canada. I'm sure similar solutions exist in the U.S.
I found a long-term treasury bond fund that targets a specific duration rather than a specific maturity.
https://www.td.com/ca/en/asset-manageme ... l-Bond-ETF
The ETF is TCLB, and it targets a 15-year duration regardless of the prevailing interest rate. When rates are low, it buys bonds on the shorter side. When rates are high, it buys bonds on the longer side.
This helps to ameliorate concerns about the asymmetric risk-reward trade-offs of long bonds when rates are low.
www.allterrainportfolio.com