Reducing Bond Exposure

Screen Shot 2013-08-21 at 10.58.09 PMBond performance has significantly lagged behind North American equities over the last 12 months.  Bonds are down 5% in the past 12 months, while the S&P500 is up 25%.  This is a 30% divergence.

I believe that my bond investments might represent dead money.  Accordingly, I am selling my bonds and moving those funds to my S&P fund.

  • Buy S&P Fund @ $150.6674
  • Sell Bond Fund @ $220.0189

This is a deviation from my Asset Allocation policy and my core Investment Policy.  It’s worth noting that I failed the last time I tried actively manage my equity to bond ratio, back in the Summer of 2011.  I wonder if I will learn the same painful lesson again!


A month after making this trade it seems to be a bad call.  The S&P Fund that I bought is down 1.75% while the Bond Fund that I sold is down only 0.56%.  That’s a loss of 1.19% on the trade.  Given that the bond component of my portfolio had previously been 32.8%, this loss equates to 0.39% of my entire portfolio.  Another expensive lesson.  I will rebalance my portfolio back to include my customary bond component.

01-Aug-13 03-Sep-13 Change
S&P Fund $150.67 $148.04 -1.75%
Bond Fund $220.02 $218.78 -0.56%

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