Which performs better for the long term.
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walkinwood
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Use https://www.portfoliovisualizer.com/ for historical performance and how each will perform in YOUR portfolio.
disneysteve
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They're both pretty crappy.
VBTLX Total Bond
YTD -3.2%, 1yr -1.36, 3yr -3.53, 5yr -0.13, 10yr +1.18
VSIGX Intermediate Treasury
YTD -2.84%, 1yr -2.27, 3yr -3.34, 5yr -0.20, 10yr +0.90
Midpack
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I dumped our VBTLX position entirely 2 years ago, and put all that $ directly into Treasury Bills. I'm in no hurry to go back to any bond fund, though the worst of it may be over for them at this point.
disneysteve
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I didn’t dump ours but I did stop adding to it. I should have dumped it.
You'll be happy you didn't in a year or two.
An interesting set of articles by Prof Ed McQuarrie (aka McQ) over on Bogleheads, concluding that - as part of a portfolio - Intermediate Treasuries beat BND over the available dataset. BND has corporates and some long bonds which make it act more stock-like, so an Intermediate Treasury fund was a better diversifier. I would not have guessed.
disneysteve
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I’d be okay with that. In the meantime I loaded up on 5+% bonds so that helped offset the loss.
If you haven't sold shares, you haven't lost anything.
ncbill
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short-term treasury fund for me, which has ~10 years of spending
everything else in an equities index.
everything else in an equities index.
disneysteve
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I guess that depends on your point of view. I've lost multiple years of growth and earnings that I could have had if I had moved the money.
Dash man
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Yes, holding onto loser funds results in missed opportunities.
You'll get it back in higher dividends and increased NAV.
Al18
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Performance of VBTLX over 1,2,3,5 and 10 years looks bad. 5 year Total return is just 1.58% or just over 0.3% per year. I dumped all my bond funds in 2022 due to the recommendation of many bond experts on this forum saying bond funds do not perform like individual bonds. I switched to multiple CD ladders paying 2.2% or better. Most 1 year CD’s have been paying 5% or more over the past 20 months. I have an order in for a 3 year, non-callable CD at Wells Fargo paying 4.85%. In my opinion, bond funds will continue to pay tiny yields for the next few years. Better to stick with CD or Treasury’s.
I'm newer here and would like to read about that. Do you know where I can find those threads? Thanks.
latexman
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Start with We are entering a "Golden Period" for fixed income investing. I'd say it's the mother of all threads on that topic at that time. There were others that branched off into a specific topic, but this one should cover the bond fund versus individual bonds/CDs/MM accounts/etc.
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Chuckanut
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Not quite. It would be better to say that the loss has not been cast in concrete. The concrete part happens when the loss (or gain) is realized. It’s a nit, I think we both know what you mean. But, reality has a way of hitting us over the head if we aren’t careful how we treat it. For example, if the shares were offered as collateral on a loan, the lender might demand additional collateral if the shares fall beyond a certain point.
Markola
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If bond index funds are there to zag when stocks zig, well, they have performed admirably since 2022. I’m just hanging on to my 40% allocation and powering through, expecting that:
- Yields will continue to rise as the underlying bonds cycle through the 6.5+- year average duration. Current yield of BND is 3.36+ up from “laughable” a few years ago. That doesn’t suck, historically.
- Since the Fed and Treasury have made recessions illegal, they’ll eventually slash rates and BND price will go BOING. At that time, BND will be stuffed with relatively higher yielding issues.
Golden Mean
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I don't think this is true. I believe it was pointed out that VBTLX (and other bond funds) sold many many bonds off in 2022/2023 at a huge loss. If so, that part of your holding is gone, never to return. You'll get higher divs and increased NAV on the 90% that's left which still won't beat just holding bonds to maturity. Bond funds look to me like building a bond ladder and then panicking and selling your bonds before maturity.
ncbill
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Yep, total bond market funds got burned because of their exposure to long-term issues.
There's at least one financial guru out there who says long-term are for institutions, but individual investors should go no longer than intermediate-term.
Plus backtests over on Bogleheads showing intermediate Treasuries are the way to go.
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Montecfo
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But that is because it is interest.
Montecfo
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I am not a fan of BND. I do not think you want to index bonds.
But anyone who thought their bond portfolio was set and forget lost a lot over the past couple of years.
Demonizing bond funds misses the point. The real villain was duration in a rapidly rising rate environment.
Now I do not expect that to happen again any time soon. But you have to pay attention to rate trends. Bonds will not magically deliver a positive return in all environments. Nor will anything.
But anyone who thought their bond portfolio was set and forget lost a lot over the past couple of years.
Demonizing bond funds misses the point. The real villain was duration in a rapidly rising rate environment.
Now I do not expect that to happen again any time soon. But you have to pay attention to rate trends. Bonds will not magically deliver a positive return in all environments. Nor will anything.
OldShooter
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The behavioral finance crowd has studied in detail the fact that we little mammals are very loss-averse. That is why we pretend that when the value of our assets goes down that we haven't actually lost anything. It is not accounting; it is psychology.
Said another way, it is a sunk cost problem. The original cost of any asset is sunk -- in the past -- and is properly ignored when when making decisions about that asset. Another common example is the urge to "hold it until it gets back to where I bought it."
The lender is right, of course.
