Poor returns, high volatility, minimal yield given the risk…why would anyone in 2022 want to include Extended Duration Bond funds in a portfolio? They are awful right now, no doubt about that, but nevertheless, extended duration bonds funds like EDV can play an important role in a RP portfolio.
Bad times for bonds lately, for sure. The extent (-12.3% for BND since November) is certainly not nothing, but has produced howls and hyperbole far outstripping what would accompany a similar loss for equities. Why do bond losses produce such outsized panic?
A pillar of Risk Parity portfolios, Long-term Treasury Bonds provide positive expected return, some income, and most importantly, negative correlation with equity funds. To invest in them, I use low-cost, no-frills VGLT, though alternatives such as TLT and EDV are also great choices.