The Vanguard Emerging Markets Government Bond ETF has significantly outperformed the Vanguard Total Bond Market ETF over the past decade, prompting investors to reconsider their bond allocations amid changing correlations between bond and stock performances. With rising government debt potentially increasing risks, some investors may find the higher returns from emerging market bonds more appealing, despite their associated risks.
Given the increasing correlation between bond and stock performance, it may be prudent to reassess the traditional view of bonds as a safer asset in your portfolio. The Vanguard Emerging Markets Government Bond ETF (VWOB) offers higher returns due to the riskier nature of emerging market bonds, making it an attractive option for investors willing to accept more risk for potential higher gains compared to the traditionally safer Vanguard Total Bond Market ETF (BND).