The Barclays Capital U.S. Aggregate Bond Index is an investment-grade domestic bond index.
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Mr. Bogle believes that a simple portfolio including only two funds, the Vanguard Total Stock Market Index Fund and Total Bond Market Index Fund would be sufficient for many investors.
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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.
Vanguard would place the Muchmores firmly in its index funds, from the Short-Term Bond Index (charging 0.2% of assets per year) to the Total Stock Market Index (0.2%), a Wilshire 5000 tracker.
Following this model, you could invest your funds in Vanguard Total Stock Market Index Fund and Vanguard Total Bond Market Index Fund.
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.
Citigroup's World Government Bond Index, which measures total returns on the 21 biggest government bond markets, dipped to its lowest level for over a year.
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.
Similar to low-cost index mutual funds, ETFs track segments of the market and try to match a benchmark stock or bond index rather than beat it.
Other than parking cash for a few years in short-term bond index funds to beat money markets, lazier investors might do better with actively managed broad-spectrum bond funds.
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.
In the big scheme of things, the differences in composition between total bond market index funds and the actual U.S. bond market is not large (excluding municipal bonds).
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To show this, I created and rebalanced several portfolios using the Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) and the Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX).
It is hard for active bond management to compete with bond index funds and ETFs.
Bond investors did even worse against the Barclays Capital Aggregate Bond Index, Dalbar says.
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This is far above the 3.32% yield for the Dow Jones Corporate Bond Index.
This might suggest that emerging markets are not yet ready for a bond index at all.
Quite a run compared to the Barclays Aggregate bond Index, up 0.3%.
Vanguard's tracks the Lehman one- to five-year Bond Index, which contains only 44% U.S. Treasuries.
Over the last 10 years, the Barclays Municipal Bond Index posted positive total returns 9 times.
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The Jargoneer never simply buys a stock or an index or a bond in a straight-up way.
Morgan Emerging Markets Bond Index Global as of Tuesday, April 19, was 305 basis points over Treasurys.
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Morgan's Emerging Market Bond Index Plus, which is used by many of the world's biggest investment managers.
It makes sense for the investment-grade bond index to do better once its worst credit has dropped out.
Case in point: The Barclays Long-term Government Bond Index has gained over 25% this year through November 30th.
Vanguard Group, known for its low-fee funds, says it plans to launch Total International Bond Index later this year.
Consider that the Barclays Municipal Bond Index (the most popular industry benchmark) is comprised of predominantly longer-maturity, higher-grade debt.
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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Nonetheless, bonds deserve a place in most portfolios, although bond index funds require more careful shopping than their equity cousins.
The Merrill Lynch High Yield Master II Bond Index ended the third quarter down 1.69%, the fourth worst quarterly performance since September 1986.
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