High Net Worth Parents

[quanwen]

I personally wouldn't be comfortable with 14 individual bonds that are all BBB rated (in this scenario). I agree with your logic that you ought to be sensitive to the overall quality of the portfolio since 14 issuers is still a pretty limited number, thus you'll probably want at least several A__ grade bonds in the mix.

But you are saying that you don't need all 14 to be A__? What if the number goes down form 14? When would you suggest just to put all in MBH and forget about individual bonds?

 

[Shiny Things]

But you are saying that you don't need all 14 to be A__? What if the number goes down form 14? When would you suggest just to put all in MBH and forget about individual bonds?

1) It’s not good forum etiquette to dig up old threads like this; just so you know. If you have a new question, it’s better to start a new thread; digging up old threads is a favored technique of spammers looking to boost their post count, so we get suspicious of anyone who does that.

2) I think you may have missed the point. The point BBCW was making is that the thread-starter’s portfolio wasn’t particularly diversified. 14 isn’t a magic number.

No matter how many names are in the portfolio, you want a good mix of bonds across different ratings. You can reduce the quality if you want more yield, but that comes at the cost of higher default risk.