Need to dump VBTLX!!

[Kat07]

I know I should've been paying more attention to my Vanguard total bond market fund, VBTLX, over the years, and didn't really realize what a loser it is. Over 5 years it's down -17.23% and Max, which I assume means when I bought it, is down -6.95%. I have a total of about $96,000 in there right now. I think I want to put this into VUSXX, a treasury money market fund and at least make some money off it, yet it will be safe. Yes, I hate to sell it when it's down, but it's always down. Does anybody else have this fund and are you just waiting to see if it gets better? I always was under the impression that they are a good thing to have in your portfolio.

 

[braumeister]

Where are you getting those numbers from?
Morningstar says its five year total return has been -0.90% and YTD it's +1.74%.

 

[Kat07]

I looked at Google Finance where you can put your data in, which I did just a couple weeks ago. What's that 17.23% number with the down arrow next to it? Hopefully I'm wrong!

 

[engineernerd]

That's a bond fund, and yes its trading price is down 17.23% since May 15 2020 but the benefit of bonds comes not from price appreciation but from the dividends they throw off. braumeister is correct, you need to look at total return, not trading price.

And the point of the fixed-income share of your portfolio (including bonds and bond funds) is to reduce volatility, not increase average returns. Bond funds bring a small amount of volatility to your portfolio, much less than stocks, and on average over the long run their returns are higher than cash equivalents like CDs and money market accounts, so to me there's nothing wrong with having some in your portfolio.

 

[SecondCor521]

5 year total return for VBTLX per Vanguard's website is -0.67% ending 4/30/2025:

VBTLX-Vanguard Total Bond Market Index Fund Admiral Shares | Vanguard

investor.vanguard.com

It would be wise for you to understand why you own what you own, and what the investment performance characteristics are likely to be given the fund composition. VBTLX and VUSXX are both bond funds, but depending on the interest rate environment they are going to behave differently.

Unless you know *why* VBTLX has dropped over the last five years, and have a plausible theory as to why VUSXX is going to do better over your investment horizon, or an explanation as to why VUSXX is a better fit in your portfolio, then you may just flail around (and probably not get the results you intend or want).

 

[Kat07]

Ok, yeah, feel like an idiot now by not going to the Vanguard site like I usually do and get my figures there, where it's more clear! It said 5 -year was -0.67%. That Google Finance site is just easier to get to on my phone and I sort of panicked when I saw that down arrow next to 17.23! I thought to myself, how have I missed this all these years! Okay, breathing easier now! Thanks! But I really am considering putting some of that money into that treasury money market fund.

 

[GrayHare]

Bond funds usually take a hit in a rising interest rate environment like that of the past 5 years.

 

[SecondCor521]

Ok, yeah, feel like an idiot now by not going to the Vanguard site like I usually do and get my figures there, where it's more clear! It said 5 -year was -0.67%. That Google Finance site is just easier to get to on my phone and I sort of panicked when I saw that down arrow next to 17.23! I thought to myself, how have I missed this all these years! Okay, breathing easier now! Thanks! But I really am considering putting some of that money into that treasury money market fund.

Google Finance and Yahoo Finance both probably only do performance numbers on price change. So VBTLX has dropped in price from about $11.50 a share to $9.51 a share, so that is the 17.23% drop you see.

But VBTLX is a bond fund which pays several percentage points in interest each year, maybe 3% or 4%. So 3.5% over five years would be about 17.5% in dividends, which pretty much cancels out the price drop you see and is how Vanguard shows the -0.67% drop.

The actual performance calculations are a bit more complicated because Vanguard's numbers assume those dividends are reinvested back into VBTLX. But that's the basics.

Again, you should really understand why you want to put money into VUSXX. It's a perfectly fine investment for certain purposes, but you would want it to make sense for your purposes. For example, if you're saving up a house down payment, or if you're using a fund for a reduction in overall portfolio volatility - that would point to two different investments. Also your view on interest rate outlook, the economy, and possible more things.

 

[Kat07]

5 year total return for VBTLX per Vanguard's website is -0.67% ending 4/30/2025:

VBTLX-Vanguard Total Bond Market Index Fund Admiral Shares | Vanguard

investor.vanguard.com

It would be wise for you to understand why you own what you own, and what the investment performance characteristics are likely to be given the fund composition. VBTLX and VUSXX are both bond funds, but depending on the interest rate environment they are going to behave differently.

Unless you know *why* VBTLX has dropped over the last five years, and have a plausible theory as to why VUSXX is going to do better over your investment horizon, or an explanation as to why VUSXX is a better fit in your portfolio, then you may just flail around (and probably not get the results you intend or want).

I do understand what's in my portfolio and I also have VUSXX. At Vanguard my mix is 40/60 now that I've been retired 5 years. My portfolio has done really well. The only reason I input what I have at Vanguard into that Google Finance is because it's really easy to get to on my phone and I've been looking at it pretty often in the last couple weeks. I just panicked when I saw that down arrow next to the 17.23!! But you're right, I should have figured it out before posting on here!

 

[target2019]

Ok, yeah, feel like an idiot now by not going to the Vanguard site like I usually do and get my figures there, where it's more clear! It said 5 -year was -0.67%. That Google Finance site is just easier to get to on my phone and I sort of panicked when I saw that down arrow next to 17.23! I thought to myself, how have I missed this all these years! Okay, breathing easier now! Thanks! But I really am considering putting some of that money into that treasury money market fund.

What will the return of the two funds be in five years?

 

[Texas Proud]

I would never change from one fund to another without having a comparison

 

[Graybeard]

I am using VUSXX in my taxable account because the interest is exempt from state tax, I use VMFXX Federal Money Market in my roll over IRA which would have the interest taxable by my state in the taxable account. VUSXX can change from year to year in which case I'd use treasury bills which are also exempt from state tax and that does not change. Your bond fund will have nav appreciation when interest rates go down. I stopped using bond funds 3 years ago and don't like them, with actual bonds you know what you will receive and when assuming there is no default which for treasuries will not happen. Treasuries don't pay as much as corporate but I prefer the safety of treasuries.

 

[Kat07]

What will the return of the two funds be in five years?

Who knows? Maybe the money market will outperform the bond fund.

 

[Koolau]

Bond funds usually take a hit in a rising interest rate environment like that of the past 5 years.

And, conversely, if interest rates begin to drop, the value of your bond fund is likely to rise. No way to know the future, but now would seem more like the time to hang on - but YMMV.

 

[Al18]

Kat07, your analysis is correct - bond fund performance is terrible over the past 5+ years. Some on this forum more knowledge than me mentioned on this forum in 2022 that bond funds behave quite differently than individual bonds. I’ve switched to CD’s, whose 5 year total return has been about 20%. Some on this forum also like Treasuries.

 

[Dtail]

Got out of bond funds over 5 years ago. Happy with my other fixed income returns.

 

[target2019]

Who knows? Maybe the money market will outperform the bond fund.

You owe it to yourself to look deeper at these two investments.

Of course no one has 100% predictive power, but another layer of analysis can be done by you.

 

[Markola]

OP, I made the same mistake recently but on the Stocks app on the iPhone. It only shows NAVs, not total return with dividends.

 

[VanWinkle]

Ok, yeah, feel like an idiot now by not going to the Vanguard site like I usually do and get my figures there, where it's more clear! It said 5 -year was -0.67%. That Google Finance site is just easier to get to on my phone and I sort of panicked when I saw that down arrow next to 17.23! I thought to myself, how have I missed this all these years! Okay, breathing easier now! Thanks! But I really am considering putting some of that money into that treasury money market fund.

It all depends on when you need to spend this money. If it's less than 3 years, the money market or shorter duration bond fund would be appropriate. I have 5 times your investment in the same fund and have been buying shares at a discount since 2022. Will it pay off? Nobody knows for sure, but steady is usually a winner for me over long time periods. I like Vanguards Ultra Short Term Bond Fund for short term money. Good luck to you.

Vw

 

[Midpack]

I am not a market timer, but it was very clear the Fed was increasing rates so I sold all my VBTLX (then 26% of my AA) in late Spring 2022. There wasn't any doubt what substantially increasing Fed funds rates would do to bond funds. The Fed funds rate has been stable or down since mid 2023. Although the 5 year return is not great, most of the damage occurred Jan 2022 thru Jul 2023, so selling it now is WAY after the horse left the barn. VBTLX has had positive returns the last two years, and I am betting the Fed won't raise interest rates (though that's less clear at the moment so I am watching closely), so I bought a some VBTLX in 2024 (now 11% of AA) in my Roth. But I have been holding treasuries and MMFs where VBTLX was before in my AA, and I'm still there for the most part. YMMV

 

[Al18]

5 year Total, cumulative returns for VBTLX is -4.14% according to Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX - NASDAQ)

5 year total cumulative returns for CD’s are approximately 20%. CD returns over my lifetime have NEVER been negative.

 

[Kat07]

I do understand what's in my portfolio and I also have VUSXX. At Vanguard my mix is 40/60 now that I've been retired 5 years. My portfolio has done really well. The only reason I input what I have at Vanguard into that Google Finance is because it's really easy to get to on my phone and I've been looking at it pretty often in the last couple weeks. I just panicked when I saw that down arrow next to the 17.23!! But you're right, I should have figured it out before posting on her

I am not a market timer, but it was very clear the Fed was increasing rates so I sold all my VBTLX (then 26% of my AA) in late Spring 2022. There wasn't any doubt what substantially increasing Fed funds rates would do to bond funds. The Fed funds rate has been stable or down since mid 2023. Although the 5 year return is not great, most of the damage occurred Jan 2022 thru Jul 2023, so selling it now is WAY after the horse left the barn. VBTLX has had positive returns the last two years, and I am betting the Fed won't raise interest rates (though that's less clear at the moment so I am watching closely), so I bought a some VBTLX in 2024 (now 11% of AA) in my Roth. But I have been holding treasuries and MMFs where VBTLX was before in my AA, and I'm still there for the most part. YMMV

That's what I'm planning to do...exchange some of it for MM fund. My VBTLX is in my tIRA and my brokerage account. In my Roth I have just stock index funds, VFIAX and VTSAX, because I won't be withdrawing from that fund for many many years! Thanks!

 

[Kat07]

5 year Total, cumulative returns for VBTLX is -4.14% according to Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX - NASDAQ)

5 year total cumulative returns for CD’s are approximately 20%. CD returns over my lifetime have NEVER been negative.

Yes, I have CDs too and wish I would've had that bond fund money in CDs instead. But of course hindsight is 20/20!

 

[Midpack]

That's what I'm planning to do...exchange some of it for MM fund. My VBTLX is in my tIRA and my brokerage account. In my Roth I have just stock index funds, VFIAX and VTSAX, because I won't be withdrawing from that fund for many many years! Thanks!

So you are expecting Fed funds rate to increase substantially going forward?

 

[Sunset]

I do understand what's in my portfolio and I also have VUSXX. At Vanguard my mix is 40/60 now that I've been retired 5 years. My portfolio has done really well. The only reason I input what I have at Vanguard into that Google Finance is because it's really easy to get to on my phone and I've been looking at it pretty often in the last couple weeks. I just panicked when I saw that down arrow next to the 17.23!! But you're right, I should have figured it out before posting on here!

Since you are at Vanguard, it's very easy to buy actual treasuries at auction. Various ones come out during the week, every week and you just say how much you want to spend.

There is no fee, unlike a fund that will charge a fee (admittedly small) for something so simple to buy.