Ghost of Igloi wrote:
this might surprise you all.
Without looking it up, which class of bonds do you think has done better over the last year, as interest rates have risen? A year ago, the 10 yr was yielding 1.75%, now it is yielding 2.4%
An utter disaster for bonds right? And probably a particular disaster for long term bonds, right? You'd guess that the best performer was short term bonds, no?
BIV (intermed) +.61%
BSV (short) +.62%
BLV (long) +2.74%
The value of a coupon is substantial in lessening the losses from rises in interest rates.
Doubleline Short Term Bond DBLSX distribution yield 2%. One year return over 3% and effection duration a liitle over one year. I think a better choice than any of the above.
prediction reviews continued:
In February 2017 Igy and I had a discussion about which duration bonds might do the best. I didn't really make a prediction, but pointed out that longer term bonds had done well over the past year or so, despite rising rates. Igy seems to have thought that short term bonds were the way to go.
The results show that longer term bonds were decisively better than short term bonds this year. By a large margin.
Using BSV, BIV and BLV as Vanguard proxies for short, inter and long bonds return YTD.
Igy's pick, DBLSX, returned 2.55%