Photo courtesy Amazing Travel Photos
2009 is in the record books. How did investments in stocks and bonds fair during the past year?
Total Stock Market Index (VTSMX) returned 28.76%
Total Bond Market Index (VBMFX) returned 5.93%
Let’s see how the total stock and bond markets break down by stylebox.
Stock Funds
The nine-box style box breaks the stock market down by size and value.
| - | VALUE | BLEND | GROWTH |
| LARGE | VIVAX 19.54 | VLACX 27.80 | VIGRX 36.50 |
| MID | VMVIX 37.84 | VIMSX 40.49 | VMGRX 43.01 |
| SMALL | VISVX 30.29 | NAESX 36.15 | VISGX 41.97 |
Investors were rewarded for taking risk in the stock market. Small stocks had phenominal returns in the 30 to 40 percent range. The laggards were large value, which still had almost 20 percent return.
Bond Funds
The nine-box bond matrix breaks the bond market down by maturity and credit rating. Long-term bonds are riskier than short-term bonds. Lower-rated bonds, say BBB, are riskier than higher rated bonds like AAA Treasuries.
| - | SHORT-TERM | INTERMEDIATE-TERM | LONG-TERM |
| Treasuries | VFISX 0.19 | VFITX -4.78 | VUSTX -12.92 |
| Corporate | VFSTX 13.52 | VFICX 18.96 | VWESX 9.53 |
| Junk | N/A | VWEHX 58.21 | N/A |
In 2009, investors were rewarded for taking on credit risk and punished for staying safe. It was the mirror image of 2008. Junk bonds did phenomenal–up 58%. Treasuries had negative returns.
Summary
2009 was the comeback year for stocks. After taking a beating in 2008, in 2009 investors were rewarded for taking on riskier assets. Stocks beat bonds. Riskier stocks beat less-risky stocks. Riskier bonds beat safer bonds.
