November Surprise: Treasury ETF Yields Collapse – Five-Year Total Returns Down 57 Percent
In a shocking turn of events, the yield on Treasury bonds collapsed after Donald Trump was elected and the markets factored in infrastructure projects, interest rate changes, inflationary pressure and an increase in U.S. borrowing.
How big is the collapse? Back in August, treasury ETFs averaged 40.9 percent in total returns over the five-year period, now it is down to 17.7 percent--a 57 percent drop over the last three months.
Given the uncertainties surrounding all the individual factors affecting Treasuries, out of the 13 ETFs invested in government bonds, only one is a BUY:
iShares 20+ Year Treasury Bond ETF (TLT). This fund seeks to track the ICE U.S. Treasury 20+ Year Bond Index. It currently holds a B investment rating and is the only government bond ETF recommended by Weiss. Of the other twelve ETFs, one is a SELL and the rest are HOLDs.
A lot has happened since the last time we talked about bonds, and just as we predicted, the returns we were seeing then, did not hold up. Bond prices are down and stocks are up, mainly due to promises made by the president-elect. Don’t be caught by surprise. As ratings change you can be alerted via email if any of your Watchlist ETFs experience a rating change.