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BONDDESK® | Benefits of Bonds
Three Benefits of Bonds
1.Safety:Bonds typically provide positive returns with lower volatility than stocks.
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Fixed income securities are designed to provide a steady stream of payments and stable returns. Because they are typically less volatile than equities they can be a more effective way to finance predictable expenses such as college expenses or retirement.
Total Annual Returns: 1989-2008
Bond vs. Equity
| Index | Average | Volatility | Lowest | Highest | |
| Bond | Barclays Capital U.S. Aggregate Bond Index* | 7.6% | 5.3% | -2.9% | 18.5% |
| Equity | S&P 500 Index | 10.4% | 20% | -37% | 37.6% |
* The Barclays Capital U.S. Aggregate Bond Index is a broad-based bond index comprised of government, corporate, mortgage and asset-backed issues rated investment grade or higher.
Data Sources:
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Total Annualized Returns: 2003-2008
Bond vs. Equity
| Index | Annualized Retrun | |
| Bond | Barclays Capital U.S. Aggregate Bond Index* | 4.7% |
| Equity | S&P 500 Index | -2.2% |
* The Barclays Capital U.S. Aggregate Bond Index is a broad-based bond index comprised of government, corporate, mortgage and asset-backed issues rated investment grade or higher.
Data Sources:
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Total Annualized Returns: 1998-2008
Bond vs. Equity
| Index | Annualized Retrun | |
| Bond | Barclays Capital U.S. Aggregate Bond Index* | 5.6% |
| Equity | S&P 500 Index | -1.4% |
* The Barclays Capital U.S. Aggregate Bond Index is a broad-based bond index comprised of government, corporate, mortgage and asset-backed issues rated investment grade or higher.
Data Sources:
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Total Annual Returns: 1988-2008
Bond vs. Equity
| Index | Annualized Retrun | |
| Bond | Barclays Capital U.S. Aggregate Bond Index* | 7.4% |
| Equity | S&P 500 Index | 8.4% |
* The Barclays Capital U.S. Aggregate Bond Index is a broad-based bond index comprised of government, corporate, mortgage and asset-backed issues rated investment grade or higher.
Data Sources:
2.Convenience:Thanks to electronic trading systems, buying/selling bonds is almost as easy as trading stocks.
Trades by Transaction Size in US Fixed Income Market
Q1 2009
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Retail investors make most of the trades in the U.S. fixed income market
Institutional investors are responsible for the largest share of par value traded due to their large trades sizes. However, retail investors account for the vast majority of actual trades. According to regulatory reporting services, odd lot trades of less than $100,000 account for 79% of Corporate, and 71% of Municipal transactions.
Based on TRACE and MSRB reported trades, Q1 2009.
3.Flexibility:Individuals can match their investment preferences (risk tolerance, time horizon, etc.) to the wide variety of bonds in the marketplace.
- All Assets |
- Muni |
- Corp
Yield By Asset Class and Maturity
(Median Yield For Previous Trading Day)
| 0-6 Month | 6-12 Month | 1-2 Year | 2-5 Year | 5-10 Year | 10 Year+ | |
|---|---|---|---|---|---|---|
| Treasury | 0.05 | 0.13 | 0.19 | 0.63 | 1.63 | 3.13 |
| CD | 0.30 | 0.40 | 0.60 | 1.05 | 1.90 | 2.75 |
| Agency | 0.03 | - | 0.30 | 0.53 | 1.50 | 2.30 |
| Muni | - | - | 0.70 | 1.10 | 1.95 | 3.56 |
| Corp | - | - | 2.09 | 3.33 | 4.78 | 5.50 |
The rates above reflect median yields in transactions on the most recent trading day on the BondDesk platform and as reported to TRACE and MSRB. Yields are based on investors purchases only and include commissions and/or mark ups. In reported trades to TRACE/MSRB, we only consider transactions in less than 100 bonds. Yields are yield-to-worst and may reflect yield-to-maturity, yield-to-worst-call, or yield to mandatory put. Cells with missing data indicate groups with inadequate data points to generate meaningful median yields.
Data as-of market close, 02/03/12
YIELD BY CREDIT RATING AND MATURITY
(Median Yield For Previous Trading Day)
| 1-2 Year | 2-5 Year | 5-10 Year | 10 Year+ | |
|---|---|---|---|---|
| AAA | 0.53 | 0.78 | 1.28 | 2.75 |
| AA | 0.62 | 1.00 | 1.75 | 3.17 |
| A | 1.00 | 1.36 | 2.34 | 3.70 |
| BBB | 1.43 | 2.50 | 3.19 | 4.75 |
The rates above reflect median yields in transactions on the most recent trading day as reported to MSRB. We only consider investors purchases and transactions in less than 100 bonds. Yields are yield-to-worst and include commissions and/or mark ups. Cells with missing data indicate groups with inadequate data points to generate meaningful median yields.
Data as-of market close, 02/03/12
All Corporates: YIELD BY CREDIT RATING AND MATURITY
(Median Yield For Previous Trading Day)
| 1-2 Year | 2-5 Year | 5-10 Year | 10 Year+ | |
|---|---|---|---|---|
| AAA | - | - | 1.83 | 3.74 |
| AA | 1.00 | 1.40 | 2.95 | 4.02 |
| A | 1.62 | 2.33 | 3.35 | 4.99 |
| BBB | 2.03 | 3.47 | 5.03 | 6.26 |
Corporate Financials: YIELD BY CREDIT RATING AND MATURITY
(Median Yield For Previous Trading Day)
| 1-2 Year | 2-5 Year | 5-10 Year | 10 Year+ | |
|---|---|---|---|---|
| AAA | - | - | - | - |
| AA | 1.07 | 2.28 | 4.02 | 4.65 |
| A | 3.20 | 3.48 | 5.17 | 6.35 |
| BBB | 1.92 | 6.53 | 5.88 | 6.12 |
Corporate Non-Financials: YIELD BY CREDIT RATING AND MATURITY
(Median Yield For Previous Trading Day)
| 1-2 Year | 2-5 Year | 5-10 Year | 10 Year+ | |
|---|---|---|---|---|
| AAA | - | - | 1.83 | 3.74 |
| AA | 0.24 | 0.71 | 1.98 | 3.97 |
| A | 0.46 | 1.05 | 2.33 | 4.38 |
| BBB | 1.63 | 2.78 | 4.34 | 5.97 |
The rates above reflect median yields in transactions on the most recent trading day as reported to TRACE. We only consider investors purchases and transactions in less than 100 bonds. Yields are yield-to-worst and include commissions and/or mark ups. Cells with missing data indicate groups with inadequate data points to generate meaningful median yields.
Data as-of market close, 02/03/12
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