Bonds roaring in 2016 and no bear in U.S. equities

Junkster

The first three months has been a bondholder's dream. From government and world bonds to emerging markets (all up 4% to 6%+ YTD) to corporate and even junk. Emerging markets have come to life with a vengeance the past month. Even some stodgy bank loan funds are up over 2% YTD.

And it sure isn't because equities are in a bear market. All we have heard is about the great bear of 2016. But have you seen some of the domestic major index and equity sector returns? A lot more black than red with even energy sector funds up YTD.

TSP_Transfer

More Jumping In

Money poured into fixed-income ETFs in Q1
Mar 31 2016, 14:56 ET
Fixed-income E T F net inflows of $32.5B in Q1 were nearly triple the average of the prior 12 quarters according to Marketfield Asset Management. A notable beneficiary of the trend was the iShares Core. U.S. Aggregate Bond E T F (NYSEARCA:AGG) with about 10% of that $32.5B. This BlackRock (NYSE:BLK) stalwart has pulled in a "remarkable" 14% of all fixed-income E T F flows over the last three years and now has A U M of $34.8B.

The Vanguard Total Bond Market E T F (NYSEARCA:BND) is growing more slowly, but has the 2nd-fastest 3-year growth rate and A U M of $28.4B.

The cash, says Marketfield's Michael Shaoul, doesn't appear to be coming from other fixed-income ETFs, but instead continues a shift from actively-managed to passive funds. Shaoul also notes that flows weren't limited to those benchmark E T Fs, but also included strong moves into Treasury, investment-grade, and high-yield E T Fs.
http://seekingalpha.com/news/3170768-money-poured-fixed-income-etfs-q1
BND

Vanguard Total Bond Market E T F Experiences Big Inflow
March 29, 2016

Read more: http://www.nasdaq.com/article/vanguard-total-bond-market-etf-experiences-big-inflow-cm598895#ixzz44VbpRLWA
Looking today at week-over-week shares outstanding changes among the universe of E T Fs covered at E T F Channel , one standout is the Vanguard Total Bond Market E T F (Symbol: BND) where we have detected an approximate $172.7 million dollar inflow -- that's a 0.6% increase week over week in outstanding units

Read more: http://www.nasdaq.com/article/vanguard-total-bond-market-etf-experiences-big-inflow-cm598895#ixzz44Va5TjtL

The chart below shows the one year price performance of BND, versus its 200 day moving average:



Read more: http://www.nasdaq.com/article/vanguard-total-bond-market-etf-experiences-big-inflow-cm598895#ixzz44VTWvGFz

VTIP
"A Fed less concerned about [inflation] shifts risk to a price breakout," says F T N Financial's Jim Vogel, quickly summing up the bull case on TIPS.

Yellen's dovish remarks yesterday - especially in the face of core CPI up 2.3% Y/Y in February - sent the five-year T I P S yield lower by 15 basis points. It's off another four bps today to negative 0.33%. TIPS have returned more than 4% Y T D, outperforming most vanilla Treasurys, according to Barclays.

Pimco and BlackRock are among those bullish on the paper, and TIPS E T Fs have raked in a record $2.14B this quarter.
http://seekingalpha.com/news/3170373-tips-stay-popular-yellen
Vanguard Short-Term Inflation-Protected Securities Index Fund Stock Chart

Read more: http://www.nasdaq.com/symbol/vtip/stock-chart#ixzz44VYWxf5Z

Junkster

Thanks TSP-Transfer One of PIMCO's TIPs funds is up almost 7% YTD. I have never held so many bond funds preferring to be 100% in either junk munis or junk corporates - whichever is working best. But now holding bond funds in emerging markets, junk corp, junk muni, and bank loan. Might have to look harder at a TIPS fund. Who knows, the Baby Boomers drove stocks in the 80s and 90s as they were in the accumulation phase. Maybe they will drive bond funds of all sorts and varieties as they are in the retirement income stage.

MikeM

Who knows, the Baby Boomers drove stocks in the 80s and 90s as they were in the accumulation phase. Maybe they will drive bond funds of all sorts and varieties as they are in the retirement income stage.

Very interesting comment Junkster. Most financial pundits see bonds stagnant or losing money over the next 10 years. But your pondering statement makes sense.

Old_Skeet

It was indeed a good month for Old_Skeet as my well diversified income area, which amounts to about thirty percent of my portfolio, gained 3.6%. I have been thinking of adding a home state muni bond fund within its income mix; but, double tax free muni funds, for my state, are selling at good premiums.

hank

Old Skeet,

Is there a way to obtain the monthly or quarterly interest/dividends accrued on income funds on the last day of the month? I always need to wait until the following day to get those sums from my fund companies and update my records (but would love to have it earlier if available). Thanks

Congratulations on the good call on bonds.

Shostakovich

Bonds are roaring...awesome ! Maybe I'll get back to even with RSIVX.

Old_Skeet

Hi @hank,

Thank you for the inquiry.

I have my portfolio along with each sleeve and investment area set up in Morning's portfolio manager. With this, it is easy for me to view daily performance along with weekly, monthly, year-to-date and rolling 1, 3, 5 and 10 year performance.

I too, have to wait until the following day to find fund distributions reflected in Morningstar fund reports. In addition, it can take up to three days before the distributions actually show up in my brokerage account.

I hope this information helps.

Old_Skeet

hank

Got it. Thanks Old Skeet.

AndyJ

About TIPS - they're Treasuries first, most of them long term, and an inflation hedge second. All Treasuries, especially long T's, are up a lot - the big 20y T etf TLT is up almost 9% ytd. Even the long T + long IG corporate BLV, where I've been parked, is up > 8%.

Almost unbelievably, muni cef's are still killing it too, up 6, 7, 8% ytd and still going even after reaching near-nosebleed levels of relative premiums.

The next Fed rate-raise might be bad for high-quality bonds, though.