BondSavvy's Corporate Bond Returns

Our corporate bond returns have been beating the world’s largest bond funds and ETFs:


About this chart

What are our subscribers saying?

“I have been a member for over a year and my first year returns have been terrific - over 15% returns within 12 months!”

Ken K., Wilsonville, OR

“BondSavvy’s returns are better than I normally do investing in stocks.”

Our Corporate Bond Returns vs. iShares Bond ETFs

 

Corporate Bond Returns of Exited Recommendations

 
BondSavvy Investment Returns
Bond ETF Returns (6)
Pick Date
Sell Date
Total
Return (3)
iShares
LQD
iShares
HYG
Beat Benchmark
iShares
Bond ETF
Investment-Grade Corporate Bonds
 
 
 
 
 
 
FedEx 3.400% 2/15/28 CUSIP 31428XBP0
3/30/20
9/10/20
13.50%
12.16%
NM
E*TRADE 3.80% 8/24/27 CUSIP 269246BQ6
3/26/20
9/10/20
22.35%
17.39%
NM
Teck Resources 6.25% 7/15/41 CUSIP 878742AW5
9/5/19
9/10/20
4.18%
8.28%
NM
--
CSX Corp. 3.25% 6/1/27 CUSIP 126408HH9
3/26/20
8/12/20
12.60%
18.78%
NM
--
Expedia 3.800% 2/15/28 CUSIP 30212PAP0
3/25/20
6/19/20
31.55%
18.42%
NM
PepsiCo 3.00% 10/15/27 CUSIP 713448DY1
3/26/20
6/19/20
8.02%
15.46%
NM
--
Tiffany 4.900% 10/1/44 CUSIP 886546AD2
9/5/19
1/23/20
26.08%
2.03%
NM
HP Inc. 6.000% 9/15/41 CUSIP 428236BR3
12/13/17
1/23/20
19.22%
15.43%
NM
BNSF 3.90% 8/1/46 CUSIP 12189LAZ4
3/15/19
10/7/19
17.18%
11.62%
NM
Bed Bath & Beyond 3.749% 8/1/24 CUSIP 075896AA8
5/2/18
10/7/19
20.73%
17.34%
9.28%
Verizon 3.85% 11/1/42 CUSIP 92343VBG8
9/26/17
9/9/19
27.01%
12.53%
NM
Apple 3.45% 2/9/45 CUSIP 037833BA7
12/13/17
8/9/19
13.10%
10.53%
NM
Lazard Group LLC 3.625% 3/1/27 CUSIP 52107QAH8
8/14/18
8/9/19
11.81%
13.39%
NM
--
Marriott International 3.125% 6/15/26 CUSIP 571903AS2
12/12/18
5/21/19
8.89%
7.60%
NM
Alphabet 1.998% 8/15/26 CUSIP 02079KAC1
3/8/18
4/1/19
5.66%
5.58%
NM
High-Yield Corporate Bonds
 
 
 
 
 
 
Consolidated Comms 6.5% 10/1/22 CUSIP 20903XAE3
8/14/18
10/2/20
22.11%
NM
8.60%
American Axle 6.500% 4/1/27 CUSIP 02406PAU4
11/19/18
9/10/20
23.96%
NM
11.74%
American Axle 6.500% 4/1/27 CUSIP 02406PAU4
8/14/18
9/10/20
14.56%
NM
9.79%
Expedia 3.800% 2/15/28 CUSIP 30212PAP0
3/8/18
6/19/20
13.85%
NM
8.82%
Mercer International 5.50% 1/15/26 CUSIP 588056AW1
9/5/19
5/18/20
-9.42%
NM
-5.18%
--
Citrix Systems 4.50% 12/1/27 CUSIP 177376AE0
11/19/18
1/23/20
20.45%
NM
12.62%
Citrix Systems 4.50% 12/1/27 CUSIP 177376AE0
5/31/18
1/23/20
18.63%
NM
12.71%
DISH DBS 7.750% 7/1/26 CUSIP 25470XAY1
5/31/18
5/28/19
12.82%
NM
6.04%
JCPenney 5.65% 6/1/20 CUSIP 708130AD1
11/19/18
5/28/19
7.25%
NM
6.07%
JCPenney 5.65% 6/1/20 CUSIP 708130AD1
9/10/18
5/28/19
-3.96%
NM
3.80%
--
Pitney Bowes 4.625% 3/15/24 CUSIP 724479AJ9
5/31/18
5/15/19
10.66%
NM
5.90%
Monitronics 9.125% 4/1/20 CUSIP 609453AG0
9/26/17
9/14/18
-7.13%
NM
2.59%
--

Corporate Bond Returns of Current Recommendations

Bonds shown by pick date
BondSavvy Investment Returns
  Bond ETF Returns (6)
Pick Date
Price (1)
Sep 30, 2020 
Price (2)
Total
Return (3)
iShares
LQD
iShares
HYG
Beat Benchmark
iShares
Bond ETF
June 5, 2020
 
 
 
 
 
 
Investment Grade Bond 1
110.16
117.24
7.75%
3.30%
1.85%
Investment Grade Bond 2
95.56
106.00
12.35%
 
 
Investment Grade Bond 3
96.75
103.80
8.68%
 
 
High Yield Bond 1
101.51
102.68
2.57%
 
 
High Yield Bond 2
97.33
102.90
7.86%
 
 
Week of March 30, 2020
 
 
 
 
 
 
54.77
0.13
-99.77%
NM
14.48%
--
March 26, 2020
 
 
 
 
 
 
Investment Grade Bond 3
98.75
116.20
19.65%
16.82%
NM
Investment Grade Bond 4
91.53
100.44
11.42%
 
 
--
Investment Grade Bond 5
84.93
94.72
13.11%
 
 
--
December 12, 2019
 
 
 
 
 
 
High-Yield Bond 1
92.60
89.21
2.41%
NM
-0.18%
High-Yield Bond 2
88.85
90.54
6.20%
 
 
High Yield Bond 3
99.35
94.97
-0.57%
 
 
--
High Yield Bond 4
83.20
84.50
6.15%
 
 
September 5, 2019
 
 
 
 
 
 
High-Yield Bond 1
99.48
106.56
14.33%
NM
1.55%
May 31, 2019
 
 
 
 
 
 
Investment-Grade Bond 1
91.43
115.31
32.04%
16.50%
4.70%
High Yield Bond 1
86.60
116.28
41.92%
 
 
Investment-Grade Bond 2
86.54
113.35
36.97%
 
 
High Yield Bond 2
99.41
92.00
1.46%
 
 
--
March 15, 2019
 
 
 
 
 
 
High Yield Bond 1
95.98
103.50
16.91%
21.19%
5.63%
High Yield Bond 2
99.95
104.25
13.01%
 
 
Investment Grade Bond 1
87.95
71.16
-10.29%
 
 
--
December 12, 2018
 
 
 
 
 
 
High-Yield Bond 1
95.90
103.13
19.52%
26.70%
10.40%
High-Yield Bond 2
97.42
103.83
16.99%
 
 
Investment Grade Bond 2
79.96
56.00
-19.82%
 
 
--
SUPER BONDCAST - November 19, 2018 (4)
 
 
 
 
 
 
5/2/18 Inv Grade Bond 1 (Was HY 11/19/18)
68.34
78.03
27.59%
27.77%
10.77%
12/13/17 Investment-Grade Bond 3
76.40
111.76
56.05%
 
 
August 14, 2018
 
 
 
 
 
 
High-Yield Bond 2
96.29
103.37
17.87%
NM
8.84%
May 31, 2018
 
 
 
 
 
 
High-Yield Bond 1
91.66
98.53
25.02%
NM
10.86%
May 2, 2018
 
 
 
 
 
 
Investment Grade Bond 1
76.60
78.03
17.37%
26.99%
NM
--
 
 
 
 
 
 
Lennar 4.75% 5/30/25
99.33
109.13
22.14%
NM
11.32%
AECOM 5.125% 3/15/27
97.40
108.10
24.50%
 
 
December 13, 2017
 
 
 
 
 
 
High-Yield Bond 1
[Recommended No More Buys 9/10/18]
60.95
0.13
-80.57%
21.91%
10.54%
--
Investment-Grade Bond 3
92.27
111.76
33.26%
 
 
September 26, 2017
 
 
 
 
 
 
Investment-Grade Bond 1
[Recommended No More Buys 5/2/18]
86.86(5)
74.00
3.12%
22.52%
10.71%
--
Albertsons 7.45% 8/1/2029
(CUSIP 013104AF1)
78.50
113.00
72.55%
 
 

We compare our high-yield corporate bond returns with the iShares high-yield corporate bond ETF ("HYG") and our investment-grade corporate bond returns with the iShares investment-grade ("LQD") corporate bond ETF.  The benchmark ETF is based on the Moody's and S&P rating of our recommended bond on the recommendation date.  Split-rated bonds are compared to the HYG ETF.  "NM" means "not meaningful," as the bond shown is being compared to the other benchmark ETF. Please read additional disclosures provided in the footnotes below.   

PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. ACTUAL RESULTS MAY VARY BASED ON WHEN SUBSCRIBERS BOUGHT AND SOLD BONDS WE RECOMMENDED BUYING AND SELLING, THE BROKERAGE FIRMS THROUGH WHICH SUBSCRIBERS TRANSACT, BROKERAGE COMMISSIONS PAID, AND MARKET VOLATILITY. 

Analysis of Select BondSavvy Investment Returns

Verizon and Albertsons Bond Investment Returns: Case Studies

Many investors believe that 'interest rates' are the only thing that impact bond prices. We have two real-world examples that will hopefully dispel this notion once and for all.

On September 26, 2017, during the premier edition of The Bondcast, we recommended Verizon 3.85% 11/1/42 (CUSIP 92343VBG8) and Albertsons 7.45% 8/1/29 (CUSIP 013104AF1). Understanding the changes in these bond prices helps investors better understand what to look for when investing in bonds and what causes bond prices to rise and fall.

Verizon 3.85% '42 Case Study

Verizon is an investment-grade issuer, as its bonds are rated Baa1/BBB+ by Moody's and S&P, respectively. Bonds rated at least Baa3/BBB- are deemed 'investment-grade,' meaning that the credit rating agencies believe they have a lower risk of default than 'high-yield bonds,' which have lower ratings.

In the below chart, we compare changes in the price of the Verizon 3.85% 11/1/42 to its benchmark US Treasury 2.75% 11/15/42 (CUSIP 912810QY7). The reason it is called the 'benchmark' is that the maturity date of this Treasury bond is almost identical to that of the Verizon bond. The price of this US Treasury bond moves up and down based on the demand for this government bond. As the price for this Treasury bond increases or decreases, its yield to maturity ("YTM") moves in the opposite direction. The yield to maturity of this Treasury bond is telling investors what the 'risk-free' investment return is for a Treasury bond that matures 11/15/42, as the US Treasury is deemed to have no default risk. (We don't believe the US government has zero risk of defaulting, but that discussion is for another post.)

When the Verizon bond -- and nearly all other investment-grade corporate bonds -- are quoted on a trading desk, they will be quoted as a spread to the benchmark Treasury. This spread is referred to as the credit spread. For example, suppose:

Verizon 3.85% '42 YTM: 4.22%

US Treasury 2.75% '42 YTM: 2.89%

Credit spread:1.33%

The Verizon bond's YTM is the result of changes in the benchmark Treasury AND the credit spread. As Verizon's credit quality improves, its credit spread will typically shrink, as investors will require less return above the benchmark Treasury to compensate them for the extra credit risk they are taking. When the credit spread shrinks, the bond's yield to maturity decreases and the price of the bond increases. Similarly, if the benchmark Treasury yield moves up or down, that component of the Verizon bond's YTM will also move up or down.

A real-life example is shown in the below charts, which show bond price changes for the Verizon '42 bond we recommended September 26, 2017 and its benchmark Treasury. Since we recommended the Verizon bonds, they have increased in price 12.5 points, from September 26, 2017 through June 30, 2019, generating a total return of 21.4%, while the benchmark Treasury increased 4.3 points during the same time period. The Verizon bond price increase happened because the credit spread for these bonds shrunk, as Verizon has been reporting strong financial results. While moves in the '42 Treasury bond do impact the price of the Verizon '42 bond, the two bonds do not move in lockstep. In this case, Verizon's strong operating performance enabled the bonds to increase in price well beyond the price increase of the benchmark US Treasury bond.

Sources: Historical prices are from FINRA market data. The prices used to calculate the Verizon bond's total return are from Fidelity.com. Total returns include interest income accrued and/or received and capital appreciation. Returns do not contemplate re-investment of interest income. Total returns are not annualized returns.

Albertsons 7.45% '29 Case Study

Bonds rated below investment grade (aka 'high-yield bonds') do not trade in relation to their benchmark Treasury as shown in the below chart, which compares changes in the Albertsons 7.45% '29 bond (CUSIP 013104AF1) we recommended to its benchmark 6.125% 8/15/29 Treasury (CUSIP 912810FJ2). High-yield bonds are known as a 'credit investment,' and their price is driven by changes in the underlying credit quality of the bond issuer. For example, for the first half of 2017, the Albertsons bonds were trading at or above 96. Then, in June 2017, Amazon announced it was purchasing Whole Foods, and many investors thought Albertsons wouldn't be able to compete, which caused the bonds to fall into the 70s, at which point we recommended the bonds at 78.50 on September 26, 2017.

Since then, Albertsons has delivered strong financial performance, and the bonds increased in price 18 points from the date we recommended the bonds through June 30, 2019. You'll see the benchmark Treasury fell 2.4 points during this same time period, and movements in the prices in both bonds were not correlated.

Investment Returns Table Footnotes

* Source of bond price charts: FINRA market data. Total returns calculated by BondSavvy. Returns are not annualized.

(1) Pick date price is the top-of-book offer price shown on Fidelity.com the trading day prior to the pick date. Price assumes a $1/bond (0.1 points) mark-up on the quoted offer price.

(2) BondSavvy founder Steve Shaw owns a significant portion of BondSavvy recommendations. Prices for bonds owned by Steve were obtained from the account statement for the brokerage where the bonds were held. The prices of bonds not owned by Steve reflect the average customer sell prices reported to FINRA's Trade Reporting and Compliance Engine (TRACE) on the final trading day of the period for up to the final four customer sell trades that took place on that day.

(3) Returns are calculated from the trading date immediately prior to the Pick Date through the end of the period shown.  For returns calculations under "Corporate Bond Returns of Current Recommendations," the Pick Date Price and end-of-period price are calculated pursuant to footnotes 1 and 2 above.  For "Corporate Bond Returns of Exited Recommendations," the Pick Date Price is calculated pursuant to footnote 1.  With respect to the selling price: (i) for bonds owned by Mr. Shaw, the selling price used comes from his trade confirmation statements; (ii) for corporate bonds not owned by Mr. Shaw, the sell price reflects the top-of-book bid price available on Fidelity.com when the sell recommendation was issued or, for sells beginning September 10, 2020, the average of the three customer sell trades, as reported to FINRA TRACE, executed immediately after such sell recommendations were made.  BondSavvy believes these returns may be understated compared to the methodology of iShares returns, as (a) BondSavvy's total returns do not factor in re-investment of interest income and capital gains, which the iShares returns do include and (b) the individual bond returns reflect a purchase at the offer price and a valuation at the bid price, which can negatively impact returns from 0.25 to 0.75 percentage points on average. The iShares returns are calculated based on changes in the fund's net asset value and, therefore, aren't penalized as significantly by a bid-ask spread. Returns calculations are not annualized. BondSavvy total returns include capital gain/loss and interest accrued.

(4) During the 11/19/18 Super Bondcast, we recommended subscribers buy additional amounts of these previous BondSavvy picks. We also updated all other prior BondSavvy corporate bond investment recommendations, other than three companies which had yet to report earnings.  This was BondSavvy's first edition of The Super Bondcast, a subscriber-only webcast where we evaluate the financial performance of our issuing companies and the performance of each recommended corporate bond.  In certain editions of The Super Bondcast, we may recommend buying bonds of recommendations we had previously made a 'Hold.'  When we show 'Exited Recommendations,' these returns will show returns from both the initial pick date as well as from other times we recommended subscribers purchase these bonds over the course of our ownership of the bond.  For simplicity, other than the 11/19/18 Super Bondcast, we only show the performance from the initial pick date for bonds listed under the heading 'Corporate Bond Returns of Current Recommendations.'

(5) BondSavvy recommended these bonds at 89.92 on September 26, 2017. The price shows the blended price Steve Shaw has acquired these bonds across four different transactions. Note that we no longer are recommending purchases of these bonds but now recommend shorter-dated bonds of the same issuer.

(6) Returns calculated from the day immediately prior to the Pick Date through (i) the final trading day for the period for current recommendations or (ii) the sell date for recommendations we have sold. Source of iShares returns is the iShares website. We went to the home page for each iShares ETF, clicked "Performance" and then clicked the "View Full Chart" hyperlink under the "Growth of Hypothetical $10,000" heading. We then entered the various date ranges and recorded the investment returns shown for the specific iShares ETF.

 
Get Started