Where to obtain (Taylor's) long term total bond returns

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
EvelynTroy
Posts: 247
Joined: Sat Jun 07, 2008 8:35 am

Where to obtain (Taylor's) long term total bond returns

Post by EvelynTroy » Thu Nov 02, 2017 6:54 am

Hello -
Hope I can explain clearly what I'm interested in knowing.
At some point Taylor made a post that included a table or list he made that gave Vanguard Total Bond returns vs. Inflation each year from 1986 (when Total Bond Fund started) and 2015.
I copied that list into a google doc for reference - a shareable link:

https://docs.google.com/document/d/1Qzt ... sp=sharing

I would like to know where the inflation numbers and total return numbers came from and what exactly total return in this example means.
I thought it was a good reference and would like to update the list thru 2016. I checked on Morningstar - VBMFX, and the yearly return numbers are different than Taylor's for years shown beginning 2012. I also didn't see yearly return numbers on Vanguard for VBMFX.

Thanks for your help.
Evelyn

GLState
Posts: 102
Joined: Wed Feb 15, 2017 10:38 am

Re: Where to obtain (Taylor's) long term total bond returns

Post by GLState » Thu Nov 02, 2017 8:21 am

Total Return assumes the reinvestment of all dividends. If dividends are not reinvested (spent), investors wouldn't see the same returns. Morningstar is a reliable source for fund return data. You can find inflation data at any of the links below:

https://www.minneapolisfed.org/communit ... rates-1913
https://fred.stlouisfed.org/series/FPCPITOTLZGUSA
http://www.usinflationcalculator.com/in ... ion-rates/

Total Bond Market can be Investor shares (VBMFX), Admiral shares (VBLTX), or ETF (BND). The return data may be slightly different for each. The investor shares usually have the longest price history.

Yahoo shows return data for VBMFX since 1987 under the "Perfomance" tab....then scroll down to "Annual Total Return (%) History"
https://finance.yahoo.com/quote/VBMFX/p ... ce?p=VBMFX
Last edited by GLState on Fri Nov 03, 2017 8:48 am, edited 1 time in total.

EvelynTroy
Posts: 247
Joined: Sat Jun 07, 2008 8:35 am

Re: Where to obtain (Taylor's) long term total bond returns

Post by EvelynTroy » Thu Nov 02, 2017 8:47 am

Thanks GLstate for the reply.
The way Yahoo displays the total return % is what I'm looking for - however, almost none of the returns match up with what Taylor provided - some of them kind of looks like he rounded up, but others are just different. I just looked using the Minneapolis Fed link - those % of inflation don't match up either.
Perhaps Taylor will see this and shed some light on where these numbers he used come from.
Evelyn

sport
Posts: 6256
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: Where to obtain (Taylor's) long term total bond returns

Post by sport » Thu Nov 02, 2017 9:10 am

Evelyn,
Why don't you send Taylor a Private Message. Then he will be sure to see your question.

GLState
Posts: 102
Joined: Wed Feb 15, 2017 10:38 am

Re: Where to obtain (Taylor's) long term total bond returns

Post by GLState » Thu Nov 02, 2017 9:31 am

In the page that you linked to, the 15.2% return for 1986 seems extremely high. VBMFX (Total Bond- Investors) has an inception date of 12/11/86. VBMFX began trading 12/11/86 at $10. It finished the year (12/31/86) at $9.94. No dividends were paid.

GLState
Posts: 102
Joined: Wed Feb 15, 2017 10:38 am

Re: Where to obtain (Taylor's) long term total bond returns

Post by GLState » Thu Nov 02, 2017 9:41 am

Another idea! Go to Portfolio Visualizer https://www.portfoliovisualizer.com/backtest-portfolio and enter a portfolio of 100% VBMFX. Click the Analyze button. Scroll down and you'll see a bar chart of each year's returns. Mouse over each bar to see the value.

1987 1.54

last four years...
2013 -2.26
2014 5.76
2015 0.30
2016 2.50

EvelynTroy
Posts: 247
Joined: Sat Jun 07, 2008 8:35 am

Re: Where to obtain (Taylor's) long term total bond returns

Post by EvelynTroy » Thu Nov 02, 2017 10:38 am

Thanks again.
The Portfolio Visualizer results will work just fine for me. Its not really that big of deal. I won't bother Taylor privately - never gave that a thought though.

Reason I want to have these results is to demonstrate to a friend who insists bonds are just a drag on a portfolio and useless - while I'm trying to explain they serve as a diversifier, a shock-absorber or safety net - or as Jason Zweig notes I think people who scoff at bonds (or foreign stocks for that matter) misunderstand the point of diversification. The reason to diversify is not to increase your return, or even to lower your risk; it's to insure yourself against the unforeseeable.


Evelyn

User avatar
Taylor Larimore
Advisory Board
Posts: 26406
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Re: Where to obtain (Taylor's) long term total bond returns

Post by Taylor Larimore » Thu Nov 02, 2017 11:03 pm

Evelyn:

I went back and checked my figures showing inflation figures and Vanguard Total Bond Market Returns since 1986. There were, indeed, some small errors which I have edited and updated through 2016. The overall "observations" are the same.

viewtopic.php?t=192278#p2922331

You are a sharp (and considerate) lady.

Thank you and best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

EvelynTroy
Posts: 247
Joined: Sat Jun 07, 2008 8:35 am

Re: Where to obtain (Taylor's) long term total bond returns

Post by EvelynTroy » Fri Nov 03, 2017 7:21 am

Taylor Larimore wrote:
Thu Nov 02, 2017 11:03 pm
Evelyn:

I went back and checked my figures showing inflation figures and Vanguard Total Bond Market Returns since 1986. There were, indeed, some small errors which I have edited and updated through 2016. The overall "observations" are the same.

viewtopic.php?t=192278#p2922331

You are a sharp (and considerate) lady.

Thank you and best wishes.
Taylor
Thanks Taylor, but have to say sharp, not so much. I'm terrible with numbers and math - Only reason I noticed anything was I had saved your table and thought it would be good to update it to 2016 results. Then I couldn't figure out exactly where to get the data.
Appreciate your updating. Just a nice table to refer to now and then.
Evelyn

GLState
Posts: 102
Joined: Wed Feb 15, 2017 10:38 am

Re: Where to obtain (Taylor's) long term total bond returns

Post by GLState » Fri Nov 03, 2017 9:27 am

Evelyn ... The difference you see in Taylor's inflation numbers from published numbers is because he seems to be calculating change from the previous December CPI to the recent December's CPI. Taylor is comparing TBM with inflation, so is calculating the changes in values in a similar way. The FED calculates inflation for each month of the year and then averages them to arrive at that year's inflation number.

Code: Select all

Year       FED       Taylor's Method
2012     2.08%           1.76%
2013     1.47%           1.51%
2014     1.61%           0.67%
2015      0.12%          0.66%
2016      1.27%          2.09%
I calculated the above examples using the CPI-U data from the St.Louis Federal Reserve. Hope this helps to understand where the numbers come from.

EvelynTroy
Posts: 247
Joined: Sat Jun 07, 2008 8:35 am

Re: Where to obtain (Taylor's) long term total bond returns

Post by EvelynTroy » Sat Nov 04, 2017 8:57 am

GLState wrote:
Fri Nov 03, 2017 9:27 am
Evelyn ... The difference you see in Taylor's inflation numbers from published numbers is because he seems to be calculating change from the previous December CPI to the recent December's CPI. Taylor is comparing TBM with inflation, so is calculating the changes in values in a similar way. The FED calculates inflation for each month of the year and then averages them to arrive at that year's inflation number.

Code: Select all

Year       FED       Taylor's Method
2012     2.08%           1.76%
2013     1.47%           1.51%
2014     1.61%           0.67%
2015      0.12%          0.66%
2016      1.27%          2.09%
I calculated the above examples using the CPI-U data from the St.Louis Federal Reserve. Hope this helps to understand where the numbers come from.
Thanks very much GL for taking time to calculate and explain the results to me, i.e. where the numbers come from. I've made a copy of your post and Taylor's updated table to refer to. I learned something useful from your efforts and of course Taylors table.
Next little project is to work with portfoliovisualizer and understand those results. I've registered so I'm set to go.
Evelyn

Post Reply