Hi
@CharlesYou noted in your commentary: Under Chairman Janet Yellen and continued by Jerome Powell, the Fed tried to “normalize” rates by gradually increasing the so-called Discount Rate from near zero to 2.4% over a three-year period
from January 2016 through December 2018. The 10-year rose above 3%. It did not last long.
The average US Treasury fund drew down about 11% during this period with longer duration being hardest hit, as one would expect. Vanguard Extended Duration Treasury Index (VEDTX) was off 20.4% during this period. BlackRock iShares 20+ Year Treasury Bond ETF (TLT) off 15.2%. Its 7-10 year cousin (IEF) off 7.1%.
1. I used the period you noted (Jan. 2016 - Dec. 31, 2018) for IEF, TLT and threw in ZROZ (a bit more volatile than TLT, but represents 30 year, AAA zero coupon bonds). For whatever reason, VEDTX wouldn't chart.
2. Perhaps I've had either not enough or too much coffee; OR I don't understand your use of
"drew down" vs total return. Secondly, is that I am suffering from cranial/rectal inversion; and thus, not aware of the status.
--- VEDTX had the following total returns for the years being discussed (per M*): VEDTX ,
performance link at Vanguard.
2016 = +1.53%
2017 = + 13.52%
2018 = -3.49%
This
CHART is for IEF, TLT and ZROZ. Total return is at the right edge of the chart for the 3 year period of Jan. 2016 - Dec. 31, 2018.
Please alert me to any boo-boo's with statements or charts.
Thank you.
Catch
Comments
https://www.screencast.com/t/bSeKoQ43t9h