MichMan: Their performance at best has been pretty lackluster that last few years.
Mike 03: But I hope maybe your bonds perform better, or maybe the advisors overseeing the account can find some better performers
On bond performance, for any bonds or bond funds bought during the pre-inflation era, they have *ALL* been pretty lackluster.
In the below, all the %/year numbers are total returns: price appreciation plus dividends earned (actually they've all depreciated in price in the past 5 or more years, so the dividends have been what's made their total returns overall positive)
Let's take the intermediate-term Vanguard Core Bond fund VCOBX
https://www.morningstar.com/funds/xnas/vcobx/chart and https://www.morningstar.com/funds/xnas/vcobx/performance
Over the past 5 years they've gained 0.47%/year on average, there's no 10 year, but the category has gained 1.38%/year in the past 10 years and 2.35%/year over the past 15 years.
Or VICSX, the Vanguard Interm-Term Corporate Bond Index fund ...
Over the past 5 years: 0.96%/year, Over the past 10 years: 2.80%/year, There's no 15 year record for VICSX, but for that category its been 3.73%/year
Looking at shorter maturity, VBIRX Vanguard Short-Term Bond Index Fund. It has an effective average maturity of 2.8 Years, Average duration: 2.6 Years.
Its performance: 5Y: 1.18%/year, 10Y: 1.54%/year, 15Y: 1.69%/year
Looking at even shorter maturity, VUBFX Vanguard Ultra-Short-Term Bond Fund -- with an average effective maturity of 1.2 years, and average duration of 1.0 years:
Its performance: 5Y: 2.37%/year, no 10Y. Since 2/24/15 inception (so 9 3/4 years): 2.01%/year.
Remember that inflation during these periods have been higher, so while they have gained a bit in nominal dollars, they have ALL lost in purchasing power over these periods.
As for what may happen going forward: yes bond fund yields are decent now. And as interest rates drop, their values will rise, for a two-fer: "good" yields plus price appreciation.
It has been my hope that my funds would perform quite well going forward. For example my intermediate bond funds gained about 13% in just a couple of months last fall when overall interest rates dropped for a time.
But instead, as I wrote in #4 above, interest rates have counter-intuitively RISEN since the Fed's first rate cut Sept 18, except on the shorter end like less than one year. Bad for bond fund values for existing bond holders, very bad.
But eventually, we had hoped preelection, that eventually intermediate and longer rates would come down. But with the coming lunacy of Felonious Maximus at the country's helm and his Mad Magazine gallery of cabinet and administration picks, and plans to raise tariffs bigly, all that is out the window.
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