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How can I assess the performance of the Fixed Asset segment of my portfolio versus the overall market average?

Jan 05, 2012 by Robert from Duxbury, MA in  |  Flag
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17 votes

The most important point regarding measuring your fixed income portfolio is to compare it to a benchamark that has characteristics that are as similar as possible to your own portfolio. it does not make sense to compare a short term bond index to your fixed income portfolio that may be more similar to an intermediate bond fund. The same goes for long term bonds. The most popular benchmark is the Barclay's Aggregate bond index, AGG. This index includes bonds from many sectors and a large chunk of treasuries. If you own corporate bonds than this is not necessarily a good comparison. A better benchmark for corporates would be ITR which is the Barclays intermediate corporate bond index.

Comment   |  Flag   |  Sep 04, 2012 from Holliston, MA

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9 votes
Mark Teerlinck Level 12

Robert- Another easy way is to view an aggregated position, such AGG (which is an iShares Aggregate Bond Index ETF). You can easliy view performance on any financial website; just be careful when comparing as this most likely will not be apples to apples.

Comment   |  Flag   |  Jul 31, 2012 from Denver, CO

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8 votes
Joshua R. Dunham Level 11

Many financial websites offer ways to chart the performance of various Mutual Funds (Including Fixed Income Investments). These charting tools will often let you compare this performance to a broad market index such as the S&P 500 or the Dow Jones Industrial Average.

Comment   |  Flag   |  Jul 31, 2012 from Dallas, TX

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4 votes

You can compare it to one of the numerous bond indexes that match the type of bond you are measuring. Check out teh various indexes at morningstar.com

Comment   |  Flag   |  Jan 05, 2012 from Boston, MA

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3 votes

Given the information you supplied, it is difficult to know whether you own ETF's, Mutual Funds, individual bonds, or a combination of all three. If your fixed portfolio happens to include a variety of individual bonds it might be more difficult to assess the performance versus the appropriate benchmark. In that case you might consider obtaining a detailed analysis of your fixed income portfolio from an independent wealth management firm. I don't think you will have a problem finding any of those around here!

Comment   |  Flag   |  Sep 27, 2012 from San Diego, CA

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3 votes

Robert, Your first step will need to be some basic analysis of your own fixed income portfolio. Some factors to consider include: - Average Maturity & Duration - Average Credit Quality (measured by a ratings agency for starters) - Holding types (Municipal/Federal Govt/Agency/Corporate)

Armed with this data you can find a relative benchmark to compare to with a similar composition. A mix of ETFs or historical index data will help you make an appropriate comparison.

Comment   |  Flag   |  Nov 29, 2012 from Denver, CO

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2 votes

This is drilling into a topic that is very important, and also somewhat difficult to do unless one is familiar with the various asset classes and appropriate indexes. If just want broad fixed income that is approximate only, use ticker AGG as already mentioned. If want more accurate and nuanced, read on.

Using exchange-traded-funds (ETFs) for an easy to access benchmark will get you in the right direction. For fixed income, and any investment including equities, the key is knowing what asset class the investment is supposed to track or what you intended. You need to find the primary benchmark listed in your investment's prospectus. Georgia did a nice job of explaining the importance of using the correct benchmark. A list of "fixed income ETFs" on a provider's website (SPDR, iShares, Vanguard, etc) will give you the various types and tickers. Here is the iShares site. Slide over the "Quick ETF Finder" by asset class to see the various types and related ETF ticker - http://us.ishares.com/home.htm

Comment   |  Flag   |  Sep 26, 2012 from Western Springs, IL

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