Investing Demystified, 2nd Edition

Appendix E

Adding corporate bonds to the rational portfolio

In addition to adding sub-AA government bonds you should consider adding a board portfolio of corporate bonds to your portfolio (see Figure E.1).

Traditionally, whenever investment books like this one have proposed investment in corporate bonds (as most do) they were referring to US-based bonds. This was because their audience was often made up of US or dollar-based investors, and besides, foreign bonds were expensive and impractical to buy. While the ease of investing in non-US bonds is rapidly improving, the US dominance is still prevalent, at least relative to the US share of world GDP, at around 20%. We saw earlier that the world equity portfolio’s largest constituent by a wide ...