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Exploring Investment Grade Baby Bonds

In an article on March 18th we wrote an article on reducing portfolio volatility by focusing on exchange traded debt issues (ETD or Baby Bonds). In particular we advocated that conservative income investors should take a look at the issues that are available that have a relatively short duration--5 to 7 years to maturity. While shorter durations many times have a lower coupon than those with much longer maturity dates, they also tend to have reduce volatility relative to interest rates in general. We wrote that article with our own preferences in mind--we like nice steady net asset values in our accounts (or at least as steady as possible), while earning a return that is tolerable to us. The only problem with focusing on the shorter duration 'baby bonds' is that the number of available issues is rather limited--just 45 issues. Read more