Bond Fund Performance 2007-2009

Today, I wrap up this series and analyze the performance of some of the largest bond funds during the 2007-2009 sell-off.

And why is that? To see if money went from equity to bond funds. To eliminate bias, I return to the largest bond funds I analyzed in a previous 2012 column, here at The Southern.

Here’s the name of the bond funds by asset size and expense ratio: PTTRX (.46 percent) PIMCO total return fund I; VBMFX (.15 percent) Vanguard total bond market index investor shares; VFIJX (.11 percent) Vanguard GNMA fund admiral shares; and VWIUX (.09 percent) Vanguard Intermediate-Term tax-exempt fund admiral shares. My comparison exchange traded fund is TLT (.15 percent) iShares 20+year treasury bond ETF.

As you can see, all of these very popular bond mutual funds outperformed the market. Also, the low commission, ETF, not only outperformed the bond mutual funds but outperformed the market, 20 percent to the market return of -54.23 percent. Keep in mind past performance does not dictate future returns.

The following answers our question if money went from equity into bond funds during a large pullback. The answer is yes -- at least with these bond funds.

So, here are action points to think about:

First, these results in no way represent all equity or bond fund results during selloffs.

Second, not all bond funds guarantee profitability during downturns.

Third, not all equity funds guarantee outperformance of the market during downturns

Fourth, are your holdings diversified?

Fifth, if not, why?

Wall Street makes its money with us being in the market. We make our money with what we own and when.

If anyone is interested in my next half-day seminar, Strategies to Outperform the Market, it will be Friday, Oct. 20. Go to my website, Davidoengland.com, for details.

Next week, we will examine previous market tops to see if we can pick up clues before a downfall.

Plan your work, work your plan, and share your harvest!

DAVID O. ENGLAND is the founder of the Eye on the Market-Training Academy (Davidoengland.com) and Associate Professor Emeritus of Finance. This column is for educational purposes only and not intended as financial advice. Your decision to buy, sell, short or hold any investment product is a direct result of your decisions, free will, and research. For questions-send to thetraderseye@gmail.com.

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