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Why are many bond ETFs just like a worse-performing S&P? Question

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There is a common notion that bonds and stocks hedge each other: When business is not going well, companies borrow money to make up for sales and investments drying up, and government (especially Keynesian) tends to intervene with public works (paid for by borrowing money from the public) in a bid to revitalize the economy.

However, it seems like a lot of busywork to actually pick individual bonds and keep track of their maturation dates. For the lazy investor, ETFs are supposed to solve this problem - you just buy an ETF with bond exposure and someone else manages the day to day of maintaining a bond portfolio.

In practice, when I look at major bond ETFs like AGG, they follow the S&P very closely. They have the same shape, the same dips, except vertically compressed so that there is none of the upward trend of the S&P. That doesn't look like a hedge, that looks like a waste of money. What's going on here?

Has the market changed in recent years so that bonds have become correlated? Or are bond ETFs just not as good as picking your own bonds?

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