3 ms·
The (non-BS) default risk of the US is very close to nil. Hence the AAA is deserved. But the currency risk and the interest rate risk is very high. Here's th
by mynameishere 15y ago
The (non-BS) default risk of the US is very close to nil. Hence the AAA is deserved. But the currency risk and the interest rate risk is very high. Here's the pair trade if you want it:
http://finance.yahoo.com/q/bc?s=JNK&t=2y&l=on&z=l&q=l&c=tlt http://finance.yahoo.com/q/bc?s=JNK&t=2y&l=on&z=...
...notice that the 20 year treasury is more volatile than junk bonds.
- kai-zer 15y agoYou obviously don't understand the concept of duration. You are comparing 5-10yr debt to 20-30yr debt. More apt comparison would be intermediate treasuries, much different picture (time frame also questionable for a pure comparison): http://finance.yahoo.com/q/bc?s=JNK&t=2y&l=on&z=l&q=l&c=ief http://finance.yahoo.com/q/bc?s=JNK&t=2y&l=on&z=...
- mynameishere 15y agoYou can see some better numbers here. Of course, when I say "interest rate risk", that function involves duration. http://etfdb.com/etf/JNK/fundamentals/ http://etfdb.com/etf/JNK/fundamentals/ http://etfdb.com/etf/IEF/fundamentals/ http://etfdb.com/etf/IEF/fundamentals/