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Saturday, December 21, 2013

Bond ETF Fund Performance (Update)

I last reported on bond ETF performance on 7/7.  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, to put it mildly, for investors over the past few years.  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 not true as we look ahead to 2014.

As you can see, the returns vary widely and the funds are quite different.  For what it's worth, you'll find that 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.

Generally, as you can see in the table, the shorter duration or shorter maturity funds performed best as would be expected in a rising yield environment where the yield curve steepens.  This impact can be seen by comparing IEI (-2.57%) versus IEF (-5.75%).  The table also shows the poor performance of emerging markets 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. 

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 5.33 HIGH YIELD
AGG -1.43 TOTAL MARKET
SCHZ -1.26 TOTAL MARKET
MBB -1.13 MBS
CSJ 1.07 1-3 YR. CORP. 
IEI -0.59 3-7 YR. TREAS.
IEF -4.08 7-10 YR. TREAS.
EMB -8.05 EMERGING MKT.
BKLN 3.46 BANK LOANS
IHY 5.83 INT'L. HIGH YLD.
PFF 0.33 PREFERRED STK.
FLOT 0.48 FLOATING RATE
BSJF 5.44 2015 HIGH YLD.
LQD -2.21 INVEST GRADE CORP.
BAB -4.53 BUILD AMER.
BOND -0.56 PIMCO TOTAL RET.
HYS 7.16 0-5 YR. HIGH YLD.
VCIT -1.47 INTERM. CORP. 

1 comment:

  1. I actually had AGG in my portfolio! Got out around the beginning of this year. I wanted shorter term bonds - considering the times we live in!

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