Talk:Real Return Bonds

From finiki, the Canadian financial wiki

When updating I noticed there is no section on Stripped RRBs. Perhaps with permission, we could utilize wording from Bylo's site, Real Return Bonds.--Peculiar Investor 06:13, 14 December 2012 (MST)

They are illiquid, not often available, and should be held to maturity. Not much more needs to be said. --Shakespeare 07:19, 14 December 2012 (MST)

The Thornburg link towards the bottom in broken.--Quebec 13:57, 16 December 2014 (MST)

Fixed, confirmed each link and updated as needed. --Peculiar Investor 14:19, 16 December 2014 (MST)
Did you know there is a template, {{Dead link}}, that can be used to flag dead/broken links. Makes it easier to find them later. --Peculiar Investor 14:34, 16 December 2014 (MST)

Key benefits section

"The key benefits of RRBs are: ... lower volatility than nominal (conventional) bonds ...". Really? In the Libra data for 1993-2013 the standard deviation of RRBs is 10% whereas "all canadian bonds" (nominal bonds) have a SD of 6% and long nominal bonds have a SD of 9%. Not a problem if you hold to maturity, but perhaps surprising for what some call a "risk-free" asset. Different periods may lead to a different conclusion, but the claim needs a reference at the very least. --Quebec 17:02, 13 January 2015 (MST)

The source of that information is Real Return Bonds for Canadian Dummies | Bylo.org, which I blended into the original RRB article in December 2013. I must admit I didn't check the accuracy of the statement and I know very little about RRBs. Post on forum and ask Bylo or Shakespeare for help? --Peculiar Investor 17:19, 13 January 2015 (MST)
It seems ultimately to come from this paper, mentioned on Bylo's page. It's about TIPS, and they use mostly hypothetical inflation-linked bonds for periods during which these did not exist. The key point is that they compare 5 year hypothetical TIPS with 5 year nominal bonds, a fair comparison, but this does not work in Canada: our RRBs have far-away maturies. For XRB (a proxy for the RRB market) the weighted avg maturity is over 19 yrs. Compare this with 10 yrs for XBB (a proxy for the broad nominal bond market). No wonder RRBs are volatile when examining yearly returns... --Quebec 17:56, 13 January 2015 (MST)
If your analysis of the data suggest the statement cannot be supported, then the proper course of action is to remove it. Mention this talk page discussion in the edit summary so there are breadcrumbs to the reason for the change. --Peculiar Investor 18:19, 13 January 2015 (MST)