Vanguard VBMFX/VBTLX Bond Fund performance

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ps56k
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Vanguard VBMFX/VBTLX Bond Fund performance

Post by ps56k » Mon Dec 11, 2017 4:19 pm

Just reviewing my Vanguard Total Bond Index VBMFX / VBTLX vs the rest of the bond type funds...
Why does it seem that this fund is at the bottom ?

https://personal.vanguard.com/us/funds/ ... true#tab=1

livesoft
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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by livesoft » Mon Dec 11, 2017 4:21 pm

The bottom of what?
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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by ps56k » Mon Dec 11, 2017 4:25 pm


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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by Doc » Mon Dec 11, 2017 4:32 pm

livesoft wrote:
Mon Dec 11, 2017 4:21 pm
The bottom of what?

Code: Select all

Total Return % (12/08/2017)	1-Day	1-Week	1-Month	3-Month	YTD	1-Year	3-Year	5-Year	10-Year	15-Year
VBTLX				-0.07	 0.05	-0.06	-0.57	3.46	3.57	2.28	1.95	4.04	4.21
Bloomberg Barclays Aff Idx	-0.00	-0.02	-0.08	-0.56	3.34	3.48	2.31	2.04	4.10	4.24
Category (CI)			-0.01	-0.01	-0.07	-0.48	3.58	3.70	2.27	2.04	4.18	4.28
http://performance.morningstar.com/fund ... ture=en_US
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Munir
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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by Munir » Mon Dec 11, 2017 6:28 pm

Use the M* Compare Funds chart, http://screen.morningstar.com/Compare/F ... mpare.html, and under "performance" compare VBTLX to VFIDX (Intermediate Investment Grade), VBILX (Intermediate Bonds Index Fund), and VCOBX (Vanguard Core Bond Fund)- all intermediate Vanguard bond funds. Or use one of nisi's famous charts/graphs (which I can retrieve on M* but cannot copy onto this web site) to compare those four funds. VBTLX is often at the bottom of the list among these four funds.

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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by venkman » Mon Dec 11, 2017 11:36 pm

They list VBTLX in the category of intermediate bond funds, but that's not really what it is. It's a total bond market fund that averages out to intermediate-term. Historically, it's tended to underperform pure intermediate funds. On the other hand, it also tends to have lower Stdev, so on a risk-adjusted basis, it's generally as good or better than most intermediate funds.

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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by Munir » Tue Dec 12, 2017 2:17 am

venkman wrote:
Mon Dec 11, 2017 11:36 pm
They list VBTLX in the category of intermediate bond funds, but that's not really what it is. It's a total bond market fund that averages out to intermediate-term. Historically, it's tended to underperform pure intermediate funds. On the other hand, it also tends to have lower Stdev, so on a risk-adjusted basis, it's generally as good or better than most intermediate funds.
According to M*, VBTLX has a St. Dv. of 3.03 but "above average" risk while VFIDX has an "average risk" only and a St. Dv. of 3.17.

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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by RetireBy55 » Tue Dec 12, 2017 8:42 am

I've never been impressed with VG's bond fund returns outside of VWEHX. So for that reason (even though it's non Boglehead-esque) have most of my bond holdings at PIMCO (eg: PIMIX, PIGIX) or Fidelity (FNMIX). I realize it's taking on higher risk, but the long term track records of those funds absolutely demolish Total Bond.

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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by rkhusky » Tue Dec 12, 2017 9:22 am

Click on expanded view. Total Bond looks better over the last 10 years. Total Bond did better in 2007/2008, but was worse after. Total Bond appears safer during difficult economic periods, but lags during good times. Probably due to the high proportion of treasuries. Stocks also dropped some in 2011.

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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by venkman » Tue Dec 12, 2017 11:06 pm

Munir wrote:
Tue Dec 12, 2017 2:17 am
venkman wrote:
Mon Dec 11, 2017 11:36 pm
They list VBTLX in the category of intermediate bond funds, but that's not really what it is. It's a total bond market fund that averages out to intermediate-term. Historically, it's tended to underperform pure intermediate funds. On the other hand, it also tends to have lower Stdev, so on a risk-adjusted basis, it's generally as good or better than most intermediate funds.
According to M*, VBTLX has a St. Dv. of 3.03 but "above average" risk while VFIDX has an "average risk" only and a St. Dv. of 3.17.
Over the past 5+ years, I would expect VBTLX has underperformed on a risk-adjusted basis. Interest rate volatility has been low, and stocks have been going up, so corporate bonds funds like VFIDX have done well. There are certainly better bond funds than VBTLX if you only care about return; but the recommendations for it here are based on holding it as the entire bond portion of a 3-fund portfolio. For that purpose, it's simple and works very well.

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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by telemark » Wed Dec 13, 2017 7:09 pm

venkman wrote:
Mon Dec 11, 2017 11:36 pm
They list VBTLX in the category of intermediate bond funds, but that's not really what it is.
Exactly. I think Morningstar also classifies Vanguard total market as a large cap fund, which it sort of is only not.

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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by Doc » Thu Dec 14, 2017 10:26 am

rkhusky wrote:
Tue Dec 12, 2017 9:22 am
Click on expanded view. Total Bond looks better over the last 10 years. Total Bond did better in 2007/2008, but was worse after. Total Bond appears safer during difficult economic periods, but lags during good times. Probably due to the high proportion of treasuries. Stocks also dropped some in 2011.
Don't even bother to click on the expanded view, just scroll down to "Trailing Total Returns VBTLX" and see that VBTLX performed less well than the category average in every time period from YTD thru 15 yrs.

The reason is probably not the inclusion of longer term bonds which makes it not an intermediate term bond in some people's opinion. (The over 10 yr percentage of VBLTX is 39.0% while the category is 44.5%.) More likely the reason for the sub par performance is the higher percentage of AAA bonds probably due to the higher Treasury component which has been highlighted in recent year by Jack Bogle and others including our own rkhusky. :D

http://portfolios.morningstar.com/fund/ ... ture=en-US
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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by rkhusky » Thu Dec 14, 2017 10:34 am

Doc wrote:
Thu Dec 14, 2017 10:26 am
Don't even bother to click on the expanded view, just scroll down to "Trailing Total Returns VBTLX" and see that VBTLX performed less well than the category average in every time period from YTD thru 15 yrs.
Interesting that the expanded view chart shows VBTLX performing better than category average over last 10 years, but the table says that the category performed better over 10 years.

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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by Doc » Thu Dec 14, 2017 10:47 am

rkhusky wrote:
Thu Dec 14, 2017 10:34 am
Doc wrote:
Thu Dec 14, 2017 10:26 am
Don't even bother to click on the expanded view, just scroll down to "Trailing Total Returns VBTLX" and see that VBTLX performed less well than the category average in every time period from YTD thru 15 yrs.
Interesting that the expanded view chart shows VBTLX performing better than category average over last 10 years, but the table says that the category performed better over 10 years.
Endpoint difference? Chart 11/30/17, table 12/13/17.

Two weeks a difference makes! :shock:
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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by rkhusky » Thu Dec 14, 2017 10:49 am

Doc wrote:
Thu Dec 14, 2017 10:47 am
Endpoint difference? Chart 11/30/17, table 12/13/17.

Two weeks a difference makes! :shock:
But in a bond fund?

edit: Actually the expanded view starts on Jan 1 2007. But if you go to custom view, the default is exactly 10 years. Even that shows VBTLX above the category average, but by a much smaller margin. VBTLX did outperform a bit during Jan - Dec 2007.

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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by Doc » Thu Dec 14, 2017 1:35 pm

rkhusky wrote:
Thu Dec 14, 2017 10:49 am
Doc wrote:
Thu Dec 14, 2017 10:47 am
Endpoint difference? Chart 11/30/17, table 12/13/17.

Two weeks a difference makes! :shock:
But in a bond fund?

edit: Actually the expanded view starts on Jan 1 2007. But if you go to custom view, the default is exactly 10 years. Even that shows VBTLX above the category average, but by a much smaller margin. VBTLX did outperform a bit during Jan - Dec 2007.
On the "Trailing Total Returns VBTLX" table you get slightly different results depending on whether you choose daily, monthly or quarterly. (The end point changes and presumably the start point.)
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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by Munir » Thu Dec 14, 2017 1:55 pm

Is there a reason that neither of you use the M* "Funds compare" chart or the M* chart/graph comparing these funds in question?

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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by Doc » Thu Dec 14, 2017 2:19 pm

Munir wrote:
Thu Dec 14, 2017 1:55 pm
Is there a reason that neither of you use the M* "Funds compare" chart or the M* chart/graph comparing these funds in question?
Yes, the total return chart has end point problems and it's hard to get a visual assessment of shorter term variations because they are just wiggles on the curve. The ending value difference looks good on a long term chart but if you actually calculate the difference in annualized return rates they are often just "margin of error" amounts. It's easier to have M* do the calculations by using the performance tab.

I like to use rolling return charts to get at these problems. But another way is to use the total return chart with say a three year period and then use the slider to change the start & end points. But you can only look at one time period at a time with that method.

FWIW the chart rkhusky used originally is the funds compare chart and you get to the more normal presentation by clicking on <customize interactive chart>.
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Re: Vanguard VBMFX/VBTLX Bond Fund performance

Post by Munir » Sat Dec 16, 2017 1:37 pm

Doc wrote:
Thu Dec 14, 2017 2:19 pm
Munir wrote:
Thu Dec 14, 2017 1:55 pm
Is there a reason that neither of you use the M* "Funds compare" chart or the M* chart/graph comparing these funds in question?
Yes, the total return chart has end point problems and it's hard to get a visual assessment of shorter term variations because they are just wiggles on the curve. The ending value difference looks good on a long term chart but if you actually calculate the difference in annualized return rates they are often just "margin of error" amounts. It's easier to have M* do the calculations by using the performance tab.

I like to use rolling return charts to get at these problems. But another way is to use the total return chart with say a three year period and then use the slider to change the start & end points. But you can only look at one time period at a time with that method.

FWIW the chart rkhusky used originally is the funds compare chart and you get to the more normal presentation by clicking on <customize interactive chart>.
Doc, thanks for the explanation.

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