Bonds produced gains following a subpar start

After posting weak results for the first three months of the period, bonds managed solid gains in the final three. The broad U.S. taxable bond market returned 2.44% for the fiscal half year.

With stocks volatile and the Fed proceeding cautiously with rate hikes, bonds proved attractive. The yield of the 10-year U.S. Treasury note closed at 1.77% at the end of March, down from 2.05% six months earlier. (Bond prices and yields move in opposite directions.)

Returns for money market funds and savings accounts remained limited by the Fed’s target rate of 0.25%–0.5%—still low despite rising a quarter percentage point in December. 

International bond markets (as measured by the Barclays Global Aggregate Index ex-USD) returned 6.90%. International bonds got a boost as foreign currencies strengthened against the dollar, a turnabout from the trend of recent years. Even without this currency benefit, however, international bond returns were solidly positive.

Vanguard funds that outperformed their peer-group averages

(Periods ended March 31, 2016)

 1 year3 years5 years10 years
All Vanguard funds:83%
(287 of 345 Vanguard funds outperformed their peers; 20,254 funds in peer category for this period)
91%
(297 of 325 Vanguard funds outperformed their peers; 16,948 funds in peer category for this period)
87%
(267 of 307 Vanguard funds outperformed their peers; 14,469 funds in peer category for this period)
91%
(186 of 204 Vanguard funds outperformed their peers; 8,725 funds in peer category for this period)
Money market funds:100%
(10 of 10 Vanguard funds; 549 funds in peer category)
100%
(10 of 10 Vanguard funds; 546 funds in peer category)
100%
(10 of 10 Vanguard funds; 527 funds in peer category)
100%
(10 of 10 Vanguard funds; 441 funds in peer category)
Stock funds:77%
(160 of 208 Vanguard funds; 11,968 funds in peer category)
90%
(179 of 200 Vanguard funds; 10,285 funds in peer category)
88%
(168 of 191 Vanguard funds; 8,784 funds in peer category)
92%
(112 of 122 Vanguard funds; 5,611 funds in peer category)
Bond funds:90%
(91 of 101 Vanguard funds; 4,239 funds in peer category)
92%
(82 of 89 Vanguard funds; 3,279 funds in peer category)
79%
(64 of 81 Vanguard funds; 2,849 funds in peer category)
85%
(46 of 54 Vanguard funds; 1,742 funds in peer category)
Balanced funds:100%
(26 of 26 Vanguard funds; 3,498 funds in peer category)
100%
(26 of 26 Vanguard funds; 2,838 funds in peer category)
100%
(25 of 25 Vanguard funds; 2,309 funds in peer category)
100%
(18 of 18 Vanguard funds; 931 funds in peer category)


Results will vary for other time periods. Only funds with a minimum 1-, 3-, 5-, or 10-year history, respectively, were included in the comparison. (Source: Lipper, a Thomson Reuters Company.) Note that the competitive performance data shown represent past performance, which is not a guarantee of future results and that all investments are subject to risks. Investment returns and principal value will fluctuate, so investors’ shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data cited. For the most recent performance, visit our website at vanguard.com/performance.

Notes:

All investing is subject to risk, including the possible loss of the money you invest.

Market data sources: Vanguard, based on market benchmarks. U.S. stocks represented by the Dow Jones U.S. Total Stock Market Float Adjusted Index. International stocks represented by the FTSE Global All Cap ex US Index. Bonds represented by the Barclays U.S. Aggregate Bond Index.