The benchmark Lehman U.S. Aggregate index is weighted 18.6% to corporate bonds and 42% to mortgages, which is its biggest sector.
The fund gained 1.32% Monday, outperforming its benchmark, the Lehman Brothers U.S. Aggregate Index, by 0.51 percentage point, according to Chicago investment-research firm Morningstar Inc.
He bought zero coupon bonds in 2004 and 2005, when others thought inflation would crush them, and returned 11% and 12%, net of fees, versus the Lehman Aggregate Index's 4% and 2%.
By way of example, the heavy issuance over the past several years of U.S. Government debt has increased the concentration of government-related securities in the Barclays Aggregate index, the customary benchmark for taxable fixed income mandates.
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The Barclays Capital U.S. Aggregate Bond Market Index and the newer U.S. Aggregate Float Adjusted Index are composed of investment grade U.S. bonds.
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For example, the Lehman Aggregate Bond Index contains more than 6, 000 bonds, but the Barclays iShares Lehman Aggregate Bond Fund ( AGG) contains only a little more than 100 of those bonds.
Bond investors did even worse against the Barclays Capital Aggregate Bond Index, Dalbar says.
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Quite a run compared to the Barclays Aggregate bond Index, up 0.3%.
The Barclays Capital U.S. Aggregate Bond Index is an investment-grade domestic bond index.
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That is enough to gobble nearly one-third of the recent 1.94% yield on the Barclays Capital U.S. Aggregate Bond Index.
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The Barclays Aggregate Bond Index gained 6.5% a year while individual bond buyers got stuck with a paltry 0.94% a year in gains.
The fund posted a return of 5.75% through Friday, beating the 2.37% on the Barclays Capital U.S. Aggregate Bond Index, according to data from Morningstar.
The fund had handed investors a return of 3.79% this year through Monday, compared with 7.86% on the Barclays Capital U.S. Aggregate Bond Index, according to Morningstar.
Mr. Gross's fund returned 4.16% for the year, its worst performance since 2006 and far behind the benchmark Barclays Capital Aggregate Bond Index's 7.84% gain, according to Morningstar.
The bulk of the widely tracked Barclays U.S. Aggregate Bond Index, for example, is loaded down with government debt, which currently suffers from low yields and high valuations.
Pimco Unconstrained, meanwhile, launched in June 2008, has returned an annualized 7% in the three years through August, versus a 7.2% return for the Barclays Capital U.S. Aggregate Bond Index.
Over the past decade or so, the worst loss suffered by Lehman's Aggregate Bond Index, a proxy for the entire bond market, was a 3.5% decline over two months in mid-2003.
Over the past decade or so, the worst loss suffered by Lehman's Aggregate Bond Index (amex: AGG - news - people ), a proxy for the entire bond market, was a 3.5% decline over two months in mid-2003.
The current interest rate on investment grade bonds, as measured by the Barclays Capital Aggregate Bond Market index is 2.0 percent.
First, actively-managed mutual funds cannot earn excess returns over index funds because in aggregate they earn the same as index funds, less the difference in cost.
These data are available through a site called Google Trends, which allows anyone who cares to do so to download an index of the aggregate volume of searches for particular terms or categories.
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