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2018 Bond Market return
Old 12-29-2018, 08:11 AM   #1
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2018 Bond Market return

The year is not over but I am pretty happy with the bond market returns as of now. Vanguard Total Bond Market Index is showing -0.24% today.

When I did a back-of-the-envelope calculation at the beginning of the year, I thought that with a duration of about 6 years, 4 quarter point increases would produce a loss of -6% and a yield of around 3-3.5% would deliver a return of around -2.5%. It just shows these calculations are never as simple as that. I do understand a short-term rate increase does not equate to a long-term rate increase or a total market rate but still ...
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Old 12-29-2018, 10:50 AM   #2
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Funny how quickly bond funds appreciate when we have a sudden and sharp correction.
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Old 12-29-2018, 11:26 AM   #3
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So while the fund spit out some payments it dropped -1.95 YTD.

Vanguard Total Bond Market Index Fund ETF Shares (BND) Total Returns

So basically, you would have been better off keeping the money under the mattress.

I like CD's a lot better now.
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Old 12-29-2018, 11:33 AM   #4
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Big ERN is fairly negative on bond funds in its current state. Just one opinion.
Will be interesting over the next 5 years for example, which asset (CD's vs. Bond Funds) has a better total return with similar duration.
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Old 12-29-2018, 12:15 PM   #5
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So while the fund spit out some payments it dropped -1.95 YTD.

Vanguard Total Bond Market Index Fund ETF Shares (BND) Total Returns

So basically, you would have been better off keeping the money under the mattress.

I like CD's a lot better now.
Huh? Money stuck in the mattress does not spit out payments. BND is down 0.37% YTD total return, and won’t take much to break even.
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Old 12-29-2018, 01:49 PM   #6
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I'll admit it.
I bought a managed bond fund last year and it is in positive territory.
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Old 12-29-2018, 02:23 PM   #7
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This news justifies my decision to use CD's instead of bonds for FI allocation several years ago. Last time I checked, the CD's were slightly lagging the bond fund index, but the steady returns just feel better. Now, if I could just figure out how to rebalance out of CD's.....
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Old 12-29-2018, 02:38 PM   #8
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Huh? Money stuck in the mattress does not spit out payments. BND is down 0.37% YTD total return, and won’t take much to break even.
But money in the mattress is not down at all YTD.

I have some BND and am disappointed, and I have some CD's which makes me feel better
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Old 12-29-2018, 04:50 PM   #9
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Quote:
Originally Posted by Sunset View Post
So while the fund spit out some payments it dropped -1.95 YTD.

Vanguard Total Bond Market Index Fund ETF Shares (BND) Total Returns

So basically, you would have been better off keeping the money under the mattress.

I like CD's a lot better now.
That is the return from 11/30/18, things improved since then to -.24 nav

They were going up while stocks were tanking, Cash can't do that.
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Old 12-29-2018, 07:02 PM   #10
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They were going up while stocks were tanking, Cash can't do that.


Oh yes it can!
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Old 12-29-2018, 08:44 PM   #11
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Oh yes it can!
?
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Old 12-30-2018, 06:17 AM   #12
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Quote:
Originally Posted by Sunset View Post
So while the fund spit out some payments it dropped -1.95 YTD.

Vanguard Total Bond Market Index Fund ETF Shares (BND) Total Returns

So basically, you would have been better off keeping the money under the mattress.

I like CD's a lot better now.
The thoughts that influence my fixed income investments are:

Long term
Simplicity
Low cost

I don't know if CDs will beat a bond market index long term but maybe they will. But then I have to manage them, and I am trying to avoid that.
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Old 12-30-2018, 06:26 AM   #13
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Big ERN is fairly negative on bond funds in its current state. Just one opinion.
Will be interesting over the next 5 years for example, which asset (CD's vs. Bond Funds) has a better total return with similar duration.
The articles I have read in the past show that bonds and bond funds do better than CDs over the long run. And I don't have to manage them (for an acceptable fee that is below 0.10%).
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Old 12-30-2018, 07:15 AM   #14
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These are personal performance results, and don't necessarily agree with published information for the funds.

VBTLX (AA 7.5%)
3.6% - 10 years
1.9% - 5 years
1.3% - 3 years
-1.4% - 1 year

VNJTX tax free muni fund (AA 2.5%)
5.2% - 10 years
4.4% - 5 years
3.5% - 3 years
1.5% - 1 year

VWIAX Wellesley (AA 5.0%)
5.3% - 5 years
5.4% - 3 years
0.7% - 1 year

Stable Value Fund (AA 5%)
1.69% - 10 year
1.66% - 5 year
1.91% - 3 year
2.27% - 1 year

Discover (AA 2.5%)
2.00%

Diversified fixed income is one strategy. And of course, the future is unknown. Good time to review all, and make adjustments in 2019!
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Old 12-30-2018, 08:19 AM   #15
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My wife understands CDs.
In addition to yield, one of my investing goals to balance is to leave an estate my wife is comfortable with when I'm gone.
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Old 12-30-2018, 08:26 AM   #16
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Like many, I have both traditional and Roth retirement accounts. I want a healthy representation of bonds and am slowly adjusting holdings using rebalancing/withdrawals so that bonds are in the traditional account and stocks in the Roth.

The assumption is that stocks will have higher growth over the long run. Ignoring 2018 and similar, of course!
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Old 12-30-2018, 10:04 AM   #17
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Not sure if this qualifies as a Bond Market Return, 'cuz I don't know the terminology, but our older Ibonds are still giving just about 5%.
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Old 12-30-2018, 10:26 AM   #18
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I threw in the bond towel and bought some TIPS to be held to maturity in retirement accounts. Should get a bit over 1% real return. Nice complement to my old iBonds of 2001. I just don't want to worry about the FI portion of our portfolio for a few years. Now all I have to worry about are the equities.

I see that our VFSUX short term IG bonds have 0.94% YTD returns. I sold the VFIDX intermediate term IG which have had a lousy -0.71% YTD returns in order to buy the TIPS.
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Old 12-30-2018, 10:27 AM   #19
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Quote:
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Not sure if this qualifies as a Bond Market Return, 'cuz I don't know the terminology, but our older Ibonds are still giving just about 5%.
Yes they are definitely bonds. You are a long term winner there. Congrats.
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Old 12-30-2018, 10:38 AM   #20
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I sold some bond funds as they were starting not to perform

pimix - flat when I sold it- may be improving now
FFrhx, SAMBX, - (plus two other bank loan funds (about 3%) -- sold them as they started rolling over.
individual bonds (varies) 2.5% or so.
I bonds (not a clue... but the ones from 2000 should have done well.

I avoided normal bond funds this year because I expected rising rates.
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