Additionally, a paltry 1.2% of government long funds outperformed the Barclays Long Government index over the past one-year period, and only 15% outperformed the benchmark in a five-year period. [Active Fund Aches: Are Passive ETFs More Profitable?]
“Some investors may expect yields to increase, but I doubt the Federal Reserve can pull that rabbit out of the hat when other countries have lower rates. An increase in domestic rates would result in a surge of cash inflows to the U.S. as foreign investors would seek dollars to buy up the higher yielding treasury securities. The resulting appreciation of the dollar would slam domestic employment and contradict one of the two dual mandates of the Federal Reserve. Until we see some major changes in the world economy, 4.2% is a fairly reasonable yield,” according to a Seeking Alpha post.
Long-term Treasuries have strengthened and yields dipped on the continued decline in oil prices helped push down inflationary pressures. Meanwhile, short-term Treasury yields have been anchored as speculators bet on a slow interest rate hike from the Federal Reserve.
Vanguard Long-Term Bond ETF
