In 2010, which, as I have just blogged, is looking nicely average in its stock market performance, has been great for bonds.
Just as there is a generally accepted performance benchmark for stocks–about 10%–the bond market is typically believed to return about 5% (and with less volatility by far than the stock market). Interestingly, in 2010, the bond market has done very, very well–at least the high quality bond market which I invest in.
The Vanguard GNMA Fund (VFIIX) has returned 7.72% through the end of October as well as returning a yield of 3.11% according to Yahoo! Finance. The other bond fund I use, the Vanguard Total Bond Index Fund (VBMFX), has done even better, with a 8.27% return and 3.40% yield according to the same source.
Those are fantastic returns for these fixed income instruments! They’ll always be a large part of my portfolio.
September was a fantastic stock market month. It turns out that October was, while not as fantastic, still a great month in and of itself.
In the stock portion of our portfolio, the Vanguard Total Stock Market Index (VTSMX), the fund which makes up more of our portfolio than any other, was up 3.47% in October. Remember, this fund also pays a 1.88% yield. The Vanguard Total International Stock Index (VGTSX), which makes up the rest of the stock portion of our portfolio, was also up, 2.65% for the month while paying a 2.30% yield.
Rounding out our portfolio are the fixed income funds. The Vanguard Total Bond Market Index (VBMFX) was up a penny for the month, or .0009% but paid a healthy 3.44% yield; our final fund, the Vanguard GNMA Fund (VFIIX), was up almost a dime, or .0082%, while paying a 3.11% yield.
All of our funds were up in October! Let’s hope the momentum continues through November.
The best stock market September in many decades lifted our portfolio to an all time high this month. Let’s see how our four mutual funds did.
In the fixed income section of the portfolio, the Vanguard GNMA Fund (VFIIX) was down a miniscule .005% while yielding 3.08%; its companion, the Vanguard Total Bond Index Fund (VBMFX) was down an even smaller .0009% while yielding a healthy 3.47%. Both of these funds have done very well while I’ve owned them in providing fixed income ballast in a stormy market.
In the stock market part of the portfolio, September was huge. The Vanguard Total Stock Index Fund (VTSMX) was up 5.69% for the month while paying a 1.96% yield. Its companion, the Vanguard Total International Stock Index Fund (VGTSX) was up an even better 6.71% while paying a 2.54% yield.
September was amazing. Let’s hope that the momentum continues the rest of the year.
The answer, as far as our stocks go, is no, although it’s not nearly as horrible as some of our other months were. Unfortunately, the markets were not able to build on their July momentun.
In August, the Vanguard Total Stock Market Index (VTSMX) was down 6.77% (although, remember, this mutual fund pays a dividend, yielding 1.96%). The Vanguard Total International Stock Index (VGTSX) was also down, a slightly better 6.04%, while yielding 2.54%.
In the fixed income part of our portfolio, the Vanguard GNMA Fund (VFIIX), paying 3.08%, was up, albeit a miniscule 0.02%, and the Vanguard Total Bond Index Fund (VBMFX), yielding an even better 3.47%, was up an even better 0.46%.
It wasn’t the best month, but not the worst either. Let’s see how September stacks up!
One of the real stars of my portfolio over the last year or two has been the Vanguard GNMA Fund. This fund is a five star Morningstar rated mutual fund with at least 80% of its assets in Ginnie Mae backed mortgage securities. Typically with a price per share between $9.50 and $10.50, it’s been seeing rising prices and is now over $11. It continues to pay a nice dividend (last check 3.10%), seen a return to date of 6.48%, and is about as secure as possible. And it has a legendary Vanguard low expense ratio of 0.23% versus the typical 1.00% for this kind of fun.
Everyone needs at least some bonds in their portfolio and it’s hard for me to find a better fund than this one.
When I start writing this post every month (like right now), I tend to have a general idea of how the model portfolio did, but have not yet run the numbers. It’s the same this month, and I’m sure this time that May was an absolutely ugly month for investing.
The Vanguard Total Stock Market Index (VTSMX) was down a very ugly 9.26% for the month, giving up all of its gains for 2010. The Vanguard Total International Stock Index (VGTSX) was down an even worse 11.09%, also in negative territory for the year.
On the positive side, the Vanguard GNMA Fund (VFIIX) was up 1.30% while continuing to pay a healthy 3.44% yield, and the Vanguard Total Bond Market Index (VBMFX) was up 0.76% while paying a 3.77% yield.
Unfortunately, one negative month gave up all of our gains for the year. Let’s hope June treats us better.
I haven’t run the numbers up until writing this post, but I think that our model portfolio did very nicely in April. So let’s see what those numbers look like now:
Starting this time with the fixed income portion of our porftolio, the Vanguard GNMA Fund (VFIIX) was up 0.654% for the month while paying that 3.44% yield; the Vanguard Total Bond Index Fund (VBMFX) was also up, 0.762% while paying 3.77% yield. These bond funds have done just beautifully for quite some time.
On the equity portion of our portfolio, the Vanguard Total Stock Market Index Fund (VTSMX), where we maintain our single largest position, was up 1.40% for the month, while also paying a 1.66% yield; finally, the Vanguard Total International Index Fund (VGTSX) was down for the month 3.43% for the month while paying a 2.39% yield.
Three of the four funds were up for the month and three of the four were up for the year to date through April. May’s been rocky but we’ll see how it goes.
As I’ve been discussing for awhile, I finally got my asset allocation done for 2010. It took me a long time to do this, partly due to the dynamic nature of the accounts (stocks trade every business day as we all know, and prices fluctuate possibly substantially) and also due to the number of accounts I have.
The majority of my invested money is in my 403(b) which is with Vanguard. I am fortunate that my employer has instituted the Vanguard Brokerage Option (VBO) which I’ve blogged about several times. Trading online in the account is simple and apparently just like a regular Vanguard brokerage account (I don’t have one so I can’t verify this). I exchanged some dollars in one fund for some dollars in another fund–simple. Finally, to get my asset allocation where I wanted, I had to add money from my 403(b) into my VBO and buy more of a fund I was already holding.
I could not figure out a way to do it online.
I called the next day and made the transfer and asked if it was possible to move money from my 403(b) to the VBO online and was told it wasn’t and there were no plans to do so as far as the representative knew; he explained there are so many restrictions on moving money this way for various 401(k) and equivalent plans they weren’t likely to make this part of the online service anytime soon.
In my view, that’s a serious flaw, but otherwise, I’m pretty thrilled with my Vanguard Brokerage Option.
It took me forever and a day but I finally got my asset allocation for 2010 done this past week. I called Vanguard on Tuesday.
Meaning that before the massive drop on Thursday, a five figure amount of money was moved out of the stock market, on its way to the Vanguard GNMA Fund (VFIIX).
All I was was lucky. I could have (actually ought to have) moved that money in February. It just didn’t happen until now.
So, not a genius. Knew nothing more than anyone else and probably a bit less than many. Just happened to luck out.
It was such a great year for stock market investing in 2009 that my portfolio’s asset allocation has been taken totally out of whack.
In early 2009 I rebalanced my portfolio to have a lower than usual allocation (for me) in bonds of 25%, with the remaining 75% in stocks, 50% in domestics and 25% in international.
When I calculated my current allocation this past weekend, I found that my bonds had become just 20.99% of the total portfolio; international stocks had shrunk to just 19.77%; but domestic stocks had grown to 59.24%.
What a year for domestic stocks! It makes it a huge amount to trim from my domestic stock portfolio to balance out better, especially since I’m wanting to get back to a more typical 30% bonds, 50% domestic stocks, 20% international stocks allocation.
I will work on this in the next few days.
