Even among rational investors with diversified portfolios, there seems to be less known about the inner workings of the bond portion of their investments. Here on the show today to help us get a better understanding of fixed income investments is none other than Dave Plecha, Global Head of Fixed Income at Dimensional Fund Advisors. Dave is one of the authorities on the subject of bonds and is amazing at articulating the concepts at play in this arena. This conversation goes in-depth, but is also a great starting point for investors to begin thinking about this part of a portfolio, and deepen an understanding of something that is so often misunderstood or misused. As you will hear, Dave has a real passion for this subject and has been presenting and speaking on precisely this work for the last twenty years. We cover a lot of ground with Dave, talking about why his approach might be confused with a certain type of market timing, the impacts of inflation, the current low interest rates and if these affect bond investments, an explanation of forward rates, and so much more that you will not want to miss. We even find time for a quick story about Dave's early days working with Eugene Fama, so make sure to stay tuned in for that. Timestamps: 0:00 Intro 2:42 The role of bonds in a portfolio 4:20 Premium on top of the risk-free rate 5:40 Interest rates 10:22 Inflation wiping out expected bond returns 17:05 Long bonds are better diversifying assets? 19:35 Stock market vs Bond Market 24:38 Trading a bond 26:55 Liquidity in the bond market drying up? 29:51 Volatile movement around ETFs 32:21 Dimensional's approach to trading bonds 34:52 Factors in expected returns and fixed income 41:23 Forward rates and strategy 48:30 Expected premium is the same as saying what the maturity premium is? 51:12 Is this market timing? 57:50 Being globally diversified in your fixed income allocation 1:00:21 If someone just owns a universe bond fund are they still getting access to the premiums? 1:05:41 Trace in the bond market 1:12:32 Variable maturity and a variable credit approach to fixed income 1:15:29 Argument for having some allocation to fixed income 1:16:40 Quarterly rebalancing closer to being better? 1:17:40 Gene Fama stories 1:19:11 How do you define success in your life? Links From Today’s Episode: Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ Shop Merch - https://shop.rationalreminder.ca/ Join the Community - https://community.rationalreminder.ca/ Follow us on Twitter - https://twitter.com/RationalRemind Follow us on Instagram - @rationalreminder Benjamin on Twitter — https://twitter.com/benjaminwfelix Cameron on Twitter — https://twitter.com/CameronPassmore Dave Plecha — https://us.dimensional.com/about-us/media-center/dave-plecha-in-investment-week-why-fixed-income-is-as-effective-now-as-it-has-ever-been Dimensional — https://us.dimensional.com/ David Booth — https://www.dimensional.com/us-en/insights/the-power-of-professional-advice