To be fair, this is only true in nominal terms. Starting in Jan. 2019 (before that massive windfall), BND and VGIT have had nominal annual returns of 1.16% and 1.37%, but negative real returns (by a few percent annualized each). Even TIPS funds like VTIP and SCHP have had negative real returns (though much smaller).Of course you would if bond NAV had gone considerably higher in the period of interest. In fact when that happens you are supposed to cash out some of it to rebalance.I don't hold individual bonds, but if I did, I would not want to cash in early to rebalance.
One of the amazing things I noticed about the bond "disaster" between Jan '21 and Sep '22 was that it was preceded by a massive windfall in bonds before that such that the net trace of bond holding value in my portfolio was simply flat. The bond disaster and the bond windfall in my portfolio simply evaporated. Since we are talking two year or less ups and downs over a total of four years in funds for me that have 6-7 year duration the whole event is utterly uninteresting. And beside that we didn't rebalance anyway.
But 100% agreed with your point, which is that if you take even the medium-term view this "disaster" wasn't so disastrous.
Statistics: Posted by brightlightstonight — Sat Aug 10, 2024 3:04 pm — Replies 14 — Views 777