Gyroscopic Investing

What are people's thoughts on using the PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund for the bond portion?

http://www.pimcoetfs.com/Funds/Pages/PI ... l=fund_nav

It is listed under ticker symbol ZROZ
http://finance.yahoo.com/q?s=ZROZ

Would this be more or less volatile than 30-year bonds?  What are the advantages or disadvantages?

MangoMan wrote: Basically the same as using EDV. I personally prefer Vanguard to PIMCO, but YMMV.

Would it be a good idea to lower the percentage in line with the more powerful volatility, or is the view "the more power the better!"

LC475 wrote:

MangoMan wrote: Basically the same as using EDV. I personally prefer Vanguard to PIMCO, but YMMV.

Would it be a good idea to lower the percentage in line with the more powerful volatility, or is the view "the more power the better!"

I've posted a few threads on this subject. I think that it makes sense to line up the volatilities of the standard PP assets, so, for example, exchanging TLT for ZROZ or bonds for zeroes can actually bring bonds closer in line with the volatilities of the other assets. There's certainly no problem with not doing it, though. It just means that bonds are a little weaker than stocks and certainly gold.

I use them (about 25 % of the LT part) in addition to the EURO bonds EFT as the € bonds have only a duration of 22 years. The ZROZ now has a duration of 27.3 years and therefore less volatile than the 30 years bond. ZROZ distribute 4 time a year dividend. This year 19% up  . That is nice but also indicates how risky they are if interest goes up.

Thomas Hoog wrote: The ZROZ now has a duration of 27.3 years and therefore less volatile than the 30 years bond.

No, more. 30 year has effective maturity of 17.  Remember, regular 30 year bonds pay coupons, so that lowers the effective maturity.