TLT – the safest investment in the world?

  • Cash is king, but savings bank account which earns interest less than 1% is not a hedge against inflation. U.S. government bills, notes and bonds, also known as Treasuries, are considered the safest investments in the world by Americans, and are backed by the US government.
  • TLT, the iShares 20+ Year Treasury Bond ETF, tracks a basket of U.S. Treasury bonds with remaining maturities greater than twenty years.
  • TLT is not available in Singapore. It is listed in US. Earns 1.7% annually in dividends after withholding tax.
  • By conventional theory, when interest rates rise, long dated bonds such as TLT should fall. But looking at the interest rate increases in the following 3 year chart:
    • Dec 2015
    • Dec 2016
    • Mar 2017
    • June 2017

  • The TLT has remained resilient even though it is expected to drop with every interest rate increase.
  • What do you think will happen to TLT when the stock market crash?
  • Forever portfolio and Permanent portfolio are some of the many portfolios that use long dated bonds as a hedge.
  • I bought some TLT at 123 and will buy more as it drops.
  • TLT cannot be supercharged with Maybank Kim Eng.

  • I'm a remisier with Maybank Kim Eng, and as a bonds and REITs investor myself, I guide my clients to build resilient bonds and REITs portfolios. If you like to be guided, please contact me regarding how to become my client; It's free!