Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at http://www.rwinvestmentstrategies.com. If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Friday, May 23, 2014

Bond ETF Fund Performance (Update)


I last reported on bond ETF performance on 12/21.  Here is an update on the performance of funds I follow based on Morningstar performance data.

Allocating the fixed income portion of invested assets has been a challenge for investors over the past few years and continues as rates refuse to rise in tandem with experts' expectations.  Not long ago, investors could put the bulk of fixed income assets in an index fund tracking the Barclay's Aggregate Index and then go to thinking about the stock portion of assets.  Not true in 2013 and still not true as we approach mid-2014.

As you can see, the returns vary widely among the different funds.  Unfortunately, most 401(k)s do not offer a decent selection of bond funds - you are forced to select from a couple.  On the other hand, if you have an IRA, you have the selection available below as well as many others - another reason on the side of rolling over 401(k)s.

In general, you want to limit, to the extent it makes sense, the bond exposure of your investable assets  in your taxable accounts--where they will get hit with your marginal tax rate as ordinary income--and invest your bond allocation in qualified accounts like 401(k)s, 403(b)s and Roths.

The Table shows the longer duration or longer maturity funds performed best as would be expected in a declining yield environment.  Spreads tightened, as shown by the better performance of corporate bond funds, including high yield, compared to Treasury bond funds.  Note also the strong performance of emerging market bonds (EMB) and international in general.

The bogey in the bond market is AGG, the Barclay's Aggregate Bond Index - it is to the bond market what the S&P 500 is to stocks.  Thus, the overall market has achieved a return of 3.30% to date. FLOT and BKLN are essentially money market substitutes.  Their returns, therefore, although meager relative to the overall market, were quite good compared to anemic money yields.

Disclosure:  this post is for educational purposes.  Individuals should do their own research or consult a professional before making financial transactions.


ETF YTD RET.  DESCRIPTION
HYG 3.94 HIGH YIELD
AGG 3.30 TOTAL MARKET
SCHZ 3.61 TOTAL MARKET
MBB 3.66 MBS
CSJ 0.55 1-3 YR. CORP. 
IEI 1.90 3-7 YR. TREAS.
IEF 4.91 7-10 YR. TREAS.
EMB 7.27 EMERGING MKT.
BKLN 1.26 BANK LOANS
IHY 3.82 INT'L. HIGH YLD.
PFF 9.67 PREFERRED STK.
FLOT 0.59 FLOATING RATE
BSJF 1.97 2015 HIGH YLD.
LQD 5.27 INVEST GRADE CORP.
BAB 9.12 BUILD AMER.
BOND 3.53 PIMCO TOTAL RET.
HYS 1.89 0-5 YR. HIGH YLD.
VCIT 5.22 INTERM. CORP. 

No comments:

Post a Comment

Post a Comment