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STRIPS Question
Posted: Sat Sep 07, 2013 4:57 pm
by Robert
I'm sure this has been discussed but I couldn't find a thread that addressed it. Would Treasury STRIPS be more effective than the 30yr Bond? And does anyone have STRIPS within their bond allocation?
Re: STRIPS Question
Posted: Sat Sep 07, 2013 5:59 pm
by AgAuMoney
STRIPS or ZEROS aka STRIPPED or ZERO COUPON bonds tend to be more volatile since they do not pay interest. They have different tax ramifications and a somewhat different risk profile.
The question of their suitability has been discussed many times.
I have not seen a good discussion as to whether or not their is increased counterparty risk due to the somewhat synthetic nature of zeros.
I hold about 1/3 of my bond allocation as EDV.